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What we value

Annual Report 2012

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Our Charter

We are BHP Billiton, a leading global resources company.

Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.

Our Values Sustainability

Putting health and safety first, being environmentally responsible and supporting our communities.

Integrity

Doing what is right and doing what we say we will do.

Respect

Embracing openness, trust, teamwork, diversity and relationships that are mutually beneficial.

Performance

Achieving superior business results by stretching our capabilities.

Simplicity

Focusing our efforts on the things that matter most.

Accountability

Defining and accepting responsibility and delivering on our commitments.

We are successful when:

Our people start each day with a sense of purpose and end the day with a sense of accomplishment. Our communities, customers and suppliers value their relationships with us.

Our asset portfolio is world-class and sustainably developed.

Our operational discipline and financial strength enables our future growth. Our shareholders receive a superior return on their investment.


Marius Kloppers

Chief Executive Officer September 2011


BHP Billiton Limited. ABN 49 004 028 077. Registered in Australia. Registered office: 180 Lonsdale Street, Melbourne, Victoria 3000, Australia. BHP Billiton Plc. Registration number 3196209. Registered in England and Wales. Registered office: Neathouse Place, London SW1V 1BH, UK. Each of BHP Billiton Limited and BHP Billiton Plc are members of the BHP Billiton Group, which is headquartered in Australia.

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Contents


1 Key information 3

1.2

Chairman’s Review

4

4.1 Board of Directors

106

1.3

Chief Executive Officer’s Report

5

4.2 Group Management Committee

109

1.1 Our business 3

  1. Board of Directors and


    1

    Key information


    2

    Information on the Company


    3 Operating and financial review and prospects


    4 Board of Directors and

    Group Management Committee


    5

    Corporate Governance Statement


    6

    Remuneration Report

    Group Management Committee 106

      1. Selected key measures 6

      2. Our risks 7

      3. Forward looking statements 13

    1. Information on the Company 14

  2. Corporate Governance Statement 110

    1. Governance at BHP Billiton 110

    2. Shareholder engagement 111

    3. Role and responsibilities of the Board 111

2.1

BHP Billiton locations

14

5.4

Board membership

112

2.2

Business overview

16

5.5

Chairman’s role

113

2.2.1

History and development

16

5.6 Senior Independent Director

113

2.2.2

Petroleum Customer Sector Group

16

5.7 Director skills, experience and attributes

113

2.2.3

Aluminium Customer Sector Group

22

5.8 Director induction training and development

116

2.2.4

Base Metals Customer Sector Group

24

5.9 Independence

117

2.2.5

Diamonds and Specialty Products


5.10 Board evaluation

118


Customer Sector Group

27

5.11 Board meetings and attendance

120

2.2.6

Stainless Steel Materials Customer Sector Group

29

5.12 Director re-election

120

2.2.7

Iron Ore Customer Sector Group

30

5.13 Board committees

120

2.2.8

Manganese Customer Sector Group

34

5.14 Risk management governance structure

128

2.2.9

Metallurgical Coal Customer Sector Group

35

5.15 Management

129


2.2.10 Energy Coal Customer Sector Group

37

5.16 Business conduct

130

2.3

Production

40

5.17 Diversity at BHP Billiton

130

2.4

Marketing

44

5.18 Market disclosure

131

2.5

Minerals exploration

44

5.19 Remuneration

131

2.6

Group Resource and Business Optimisation

44

5.20 Directors’ share ownership

131

2.7

Government regulations

44

5.21 Company secretaries

132

2.8

Sustainability

46

5.22 Conformance with corporate governance standards

132

2.9

Employees

51

5.23 Additional UK disclosure

132

    1. Organisational structure 52

    2. Material contracts 53 6 Remuneration Report 133

2.12 Constitution

54

6.1

Message from the Remuneration Committee Chairman

133

2.13 Reserves and resources

57

6.2

Remuneration at a glance

134



6.3

Remuneration governance

136

3 Operating and financial review and prospects 80 6.4 Our remuneration strategy 137

3.1

Introduction

80

6.5 Setting Total Remuneration for the GMC

139

3.2

Our strategy

81

6.6 How performance impacts remuneration outcomes

141

3.3

Key measures

81

6.7 Statutory remuneration disclosures for the GMC

148

3.4

External factors and trends affecting our results

83

6.8 Equity awards

150

3.5

Application of critical accounting policies

88

6.9 Aggregate Directors’ remuneration

157

3.6

Operating results

88

6.10 Non-executive Director arrangements

157

3.7

Liquidity and capital resources

99



3.8

Off-balance sheet arrangements





and contractual commitments

105



3.9

Subsidiaries and related party transactions

105



3.10

Significant changes

105




BHP BILLITON ANNUAL REPORT 2012 | 1

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Contents continued



7 Directors’ Report 160

7.1 Principal activities, state of affairs

7.2

Share capital and buy-back programs

161

9.1

Consolidated Financial Statements

169

7.3

Results, financial instruments and going concern

162

9.2

BHP Billiton Plc

246

7.4

Directors

162

9.3

Directors’ declaration

251

7.5

Remuneration and share interests

162 9.4 Statement of Directors’ Responsibilities in respect

7.6

Secretaries

162 of the Annual Report and the Financial Statements 252

7.7

Indemnities and insurance

162 9.5 Lead Auditor’s Independence Declaration under

7.8

Employee policies and involvement

163 Section 307C of the Australian Corporations Act 2001 253

7.9

Environmental performance

163 9.6 Independent auditors’ reports 254

7.10

Corporate Governance

163 9.7 Supplementary oil and gas information – unaudited 256

7.11

Dividends

163

10 Glossary 262

7.12

7.13

Auditors

Non-audit services

163

164

    1. Non-mining terms 262

    2. Mining and mining-related terms 264

7.14

Value of land

164

10.3 Chemical terms 266

7.15

Political and charitable donations

164

10.4 Units of measure 266

7.16

Exploration, research and development

164

7.17

Creditor payment policy

164 11 Shareholder information 267

7.18 Class order

164

11.1 Markets

267

7.19 Proceedings on behalf of BHP Billiton Limited

164

11.2 Share ownership

267

7.20 Directors’ shareholdings

165

11.3 Dividends

270

7.21 GMC members’ shareholdings (other than Directors)

165

11.4 Share price information

270

7.22 Performance in relation to environmental regulation

166

11.5 American Depositary Receipts fees and charges

272

7.23 Share capital, restrictions on transfer of shares


11.6 Taxation

272

and other additional information

166

11.7 Ancillary information for our shareholders

276

and business review 160

8 Legal proceedings 167 9 Financial Statements 168


2 | BHP BILLITON ANNUAL REPORT 2012

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  1. Key information


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    1

    Key information


    2

    Information on the Company


    3 Operating and financial review and prospects


    4 Board of Directors and

    Group Management Committee


    5

    Corporate Governance Statement


    6

    Remuneration Report

    1. Our business

      We are BHP Billiton, a leading global resources company.

      Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

      Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.

      This strategy means more predictable business performance over time which, in turn, underpins

      the creation of value for our shareholders, customers, employees and, importantly, the communities in which we operate.

      We are among the world’s top producers of major commodities including, iron ore, metallurgical coal, conventional and non-conventional oil and gas, copper, energy coal, aluminium, manganese, uranium, nickel and silver.


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      The Group is headquartered in Melbourne, Australia, and consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group as a combined enterprise, following the completion of the Dual Listed Company (DLC) merger in June 2001.

      BHP Billiton Limited and BHP Billiton Plc have each retained their separate corporate identities and maintained their separate stock exchange listings, but they are operated and managed as a single unified economic entity, with their boards and senior executive management comprising the same people.

      BHP Billiton Limited has a primary listing on the Australian Securities Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the London Stock Exchange (LSE) in the United Kingdom and

      a secondary listing on the Johannesburg Stock Exchange (JSE) in South Africa. In addition, BHP Billiton Limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States.

      As at 30 June 2012, we had a market capitalisation of approximately US$160.6 billion. For FY2012, we reported net operating cash flow

      of US$24.4 billion, revenue of US$72.2 billion and profit attributable to shareholders of US$15.4 billion. We have approximately

      125,000 employees and contractors working in more than 100 locations worldwide.

      We operate eight businesses, called Customer Sector Groups (CSGs):

      • Petroleum

      • Aluminium (1)

      • Base Metals (including Uranium)

      • Diamonds and Specialty Products

      • Stainless Steel Materials (1)

      • Iron Ore

      • Manganese

      • Metallurgical Coal

      • Energy Coal

        (1) In May 2012, we announced that our Stainless Steel Materials and Aluminium CSGs would consolidate into a single CSG named Aluminium and Nickel. In this Report, Aluminium and Stainless Steel Materials

        are reported separately.


        BHP BILLITON ANNUAL REPORT 2012 | 3

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        1 Key information continued



    2. Chairman’s Review

      Dear Shareholder

      The past year was characterised by continued high levels of volatility and uncertainty in the world’s economy.

      The debt issues of the Eurozone remain a global concern. European governments continue to take action to address these challenges, but until they are resolved, we expect the political and financial conditions of the region to remain volatile. While there are some signs of improvement in the United States economy, a recovery

      will only continue provided there are no large external shocks. Furthermore, China and other emerging economies have also seen subdued growth as they face cyclical and structural pressures.

      In the midst of these challenges in the global economic environment, I am pleased to report that BHP Billiton performed well this past financial year. BHP Billiton’s Underlying EBIT margin remained at

      a robust 39 per cent, despite weakness in commodity markets and industry-wide cost pressures. These results were underpinned by the execution of our diversified strategy.

      Your Board is confident that our commitment to invest in high-return growth opportunities will continue to create returns for shareholders. Our largely brownfield projects in execution will continue to drive momentum in our major businesses and create value for our shareholders in the near term. Moreover, the continued urbanisation and industrialisation of developing economies should support

      both demand for our products and the long-term growth of our strong pipeline of development projects across diverse commodities and geographies.

      Recognising these opportunities, we will continue to prioritise investment where a sustainable competitive advantage exists, including geopolitical and fiscal stability. Our project approvals process will ensure that we allocate capital in a disciplined fashion, while the quality and diversity of our asset portfolio will continue to drive strong returns.

      Investing in high-return projects, while maintaining a strong balance sheet, underpins our ability to pay a dividend that grows over time. This financial year our progressive dividend increased to 112 US cents per share. Over the last 10 years, we have returned approximately US$54 billion to shareholders through dividends and share buy-backs. That represents around 30 per cent of the Group’s current market capitalisation. Moreover, our unbroken dividend generates a yield that is well in excess of our peer group.


      BHP Billiton also remains committed to making a positive contribution to our communities through capital investment, supporting local industry and creating jobs. Expanding on that commitment, this year we once again contributed one per cent of our pre-tax profit

      to community programs by voluntarily investing US$214 million.

      This included a US$65 million contribution to BHP Billiton Sustainable Communities, our UK-based charity, and a US$149 million investment in health (8 per cent), education and training (18 per cent), community infrastructure (25 per cent) and other initiatives (49 per cent).

      This was in addition to the US$11.9 billion in taxes and royalties paid to governments in the jurisdictions where we operate.

      Tragically, this year three of our colleagues lost their lives at work. No fatality is acceptable and on behalf of the Board, I offer our condolences to their families, friends and colleagues. This is a stark reminder that we must remain vigilant about safety and continue to live our values. Supporting our communities is part

      of Our BHP Billiton Charter value of Sustainability, which also includes putting the health and safety of our people first and

      being environmentally responsible. These are set out in Our Charter, which is the foundation for everything we do at BHP Billiton.

      Lastly, it is important to note that as part of our Board succession, in June 2012 Mr Pat Davies was appointed to the Board as a

      Non-executive Director. Pat’s appointment is a welcome addition to an already strong Board, providing corporate experience

      in the natural resources sector across a number of commodities and markets.

      In summary, while we continue to live with the uncertainty of the global economic environment, we expect the demand from emerging economies, our disciplined approach to capital management and our value-focused strategy to maintain our momentum in delivering strong results long term for our shareholders. On behalf of the Board and everyone involved in the Company, I would like to thank you

      for your ongoing support of BHP Billiton, as we continue to deliver on our commitments to you, our shareholders.



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      Jac Nasser AO

      Chairman


      4 | BHP BILLITON ANNUAL REPORT 2012

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    3. Chief Executive Officer’s Report

      I am pleased to report that BHP Billiton delivered a solid set

      of results in FY2012 against a backdrop of challenging industry and macro-economic conditions. Our commitment to investing through the cycle allowed us to reach new production records at 10 of our operations and was key to our financial results.

      We continue to focus on safety with a commitment to establish best practice in this area. In this regard, our total recordable injury frequency rate declined by six per cent in FY2012. However, despite this rate now being at its lowest level on record, the tragic loss

      of three colleagues over the past year is a stark reminder of the inherent risks in our industry and the need to relentlessly pursue the elimination of all fatal risks. Any fatality has a devastating effect on family, friends and colleagues, and the impact of this is felt in every corner of this Company. We truly believe that

      BHP Billiton can be a business that operates free of work-related fatalities, and it is for this reason that fatality prevention remains our number one priority.

      From a global perspective, FY2012 was characterised by uncertainty and volatility surrounding the European debt crisis which, in turn, affected global economic growth and the key markets for our products. The resulting weaker commodity prices coupled with stronger producer currencies and capital and operational cost pressures presented challenges for the global mining industry.

      In response to the prevailing market conditions, over the past year we have implemented prudent measures that will safely and

      substantially reduce operational costs and non-essential expenditure across our entire business. FY2013 will see the benefits of these significant cost reduction measures, along with substantial volume growth, flow through to our financial results.

      Despite the volatility in global economic conditions and commodity prices we have experienced in the past financial year, we see significant opportunity for our Company in the near term. While we achieved pleasing production results and production records at 10 of our operations, three of our key assets operated below capacity in FY2012 due to temporary, one-off issues. This was largely due

      to industrial action in our Queensland Coal business, shut-ins

      at our non-operated joint venture fields in the Gulf of Mexico and a temporary decrease in grades at our Escondida copper operation. With these businesses expected to return to full capacity, we are confident we will continue to produce industry leading returns for our shareholders now and into the future.


      The diversification of the BHP Billiton portfolio continues to be our defining attribute. The quality of our people, our asset


      1

      Key information


      2

      Information on the Company


      3 Operating and financial review and prospects


      4 Board of Directors and

      Group Management Committee


      5

      Corporate Governance Statement


      6

      Remuneration Report

      base and our unchanged strategy of owning and operating large, long-life, low-cost, expandable, upstream assets diversified

      by commodity, geography and market, together with our ability and commitment to investing through the cycle and delivering projects on budget and to schedule, is what sets us apart

      from our peers.

      In line with this strategy, over the next two years we will continue to invest in and grow our business. With 20 major projects currently in execution, these well advanced, low-risk, brownfield projects will

      deliver substantial volume growth and underpin our industry-leading returns in the future. As a result of our disciplined investment strategy and our commitment to maintaining our strong balance sheet, we are largely committed for FY2013 and do not plan to approve any additional major projects in this period.

      We remain confident in the long-term outlook and future demand for our products, which will continue to be driven by the urbanisation and industrialisation in the developing world. As current capital commitments reduce, we will allocate future capital to projects

      that maximise shareholder value and balance both short-term

      and long-term returns. We are in a fortunate position, with growth options unparalleled in the global resources industry, and together with our proven strategy, we will continue to deliver sustainable and superior long-term returns for our shareholders.

      Finally, I would like to take this opportunity to thank our host communities, who continue to support our activities, and our shareholders, customers, suppliers and the many others who help contribute to our success. I would especially like to thank our more than 125,000 employees and contractors around the world. It is their commitment to giving their very best efforts to us each and every day that is the cornerstone of the success of this Company.


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      Marius Kloppers

      Chief Executive Officer


      BHP BILLITON ANNUAL REPORT 2012 | 5

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      1 Key information continued



    4. Selected key measures

      1. Financial information

        Our selected financial information reflects the operations of the BHP Billiton Group, and should be read in conjunction with the 2012 financial statements, together with the accompanying notes.

        We prepare our consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, and as outlined in note 1 ‘Accounting policies’ to the financial statements in this Annual Report. We publish our consolidated financial statements in US dollars.



        2012

        2011

        2010

        2009

        2008

        Consolidated Income Statement






        (US$M except per share data)






        Revenue

        72,226

        71,739

        52,798

        50,211

        59,473

        Profit from operations

        23,752

        31,816

        20,031

        12,160

        24,145

        Profit attributable to members of BHP Billiton Group

        15,417

        23,648

        12,722

        5,877

        15,390

        Dividends per ordinary share – paid during the period (US cents)

        110.0

        91.0

        83.0

        82.0

        56.0

        Dividends per ordinary share – declared in respect






        of the period (US cents)

        112.0

        101.0

        87.0

        82.0

        70.0

        Earnings per ordinary share (basic) (US cents) (a)

        289.6

        429.1

        228.6

        105.6

        275.3

        Earnings per ordinary share (diluted) (US cents) (a)

        288.4

        426.9

        227.8

        105.4

        274.8

        Number of ordinary shares (millions)






        – At period end

        5,348

        5,350

        5,589

        5,589

        5,589

        – Weighted average

        5,323

        5,511

        5,565

        5,565

        5,590

        – Diluted

        5,346

        5,540

        5,595

        5,598

        5,605

        Consolidated Balance Sheet (US$M)






        Total assets

        129,273

        102,920

        88,852

        78,770

        76,008

        Share capital (including share premium)

        2,773

        2,771

        2,861

        2,861

        2,861

        Total equity attributable to members of BHP Billiton Group

        65,870

        56,762

        48,525

        39,954

        38,335

        Other financial information






        Underlying EBIT (US$M) (b)

        27,238

        31,980

        19,719

        18,214

        24,282

        Underlying EBIT margin (b)(c)(e)

        39.4%

        47.0%

        40.7%

        40.1%

        47.5%

        Return on capital employed (e)

        23.0%

        38.5%

        26.4%

        24.6%

        37.5%

        Net operating cash flow (US$M) (d)

        24,384

        30,080

        16,890

        17,854

        16,958

        Project investment (US$M)

        22,791

        24,517

        10,770

        13,965

        11,440

        Gearing

        26.0%

        9.2%

        6.3%

        12.1%

        17.8%

        1. The calculation of the number of ordinary shares used in the computation of basic earnings per share is the aggregate of the weighted average number of ordinary shares outstanding during the period of BHP Billiton Limited and BHP Billiton Plc after deduction of the weighted average number of shares held by the Billiton share repurchase scheme and the Billiton Employee Share Ownership Plan Trust and the BHP Bonus Equity Plan Trust and adjusting for the BHP Billiton Limited bonus share issue. Included in the calculation of fully diluted earnings per share are shares contingently issuable under Employee Share Ownership Plans.

        2. Underlying EBIT is Profit from operations, excluding the effect of exceptional items. See section 3.6.2 for more information about this measure, including a reconciliation to Profit from operations.

        3. Underlying EBIT margin excludes third party product.

        4. On 1 July 2010, the Group adopted the policy of classifying exploration cash flows which are not recognised as assets as Net operating cash flows. Previously such cash flows were classified as net investing cash flows. The change in policy arose from amendments to IAS7/AASB7 ‘Cash Flows’. Comparative figures have been restated.

        5. Underlying EBIT margin and Return on capital employed are non-IFRS measures. See section 3.3 for a reconciliation to the corresponding IFRS measure.


        6 | BHP BILLITON ANNUAL REPORT 2012

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        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

      2. Operational information

Our Board and Group Management Committee (GMC) monitor a range of financial and operational performance indicators, reported on a monthly basis, to measure performance over time. We also monitor a comprehensive set of health, safety, environment and community (HSEC) contribution indicators.



2012

2011

2010

Health, safety, environment and community




Total recordable injury frequency (TRIF)

4.7

5.0

5.3

Community investment (US$M)

214.1

195.5

200.5

Production (a)




Total Petroleum production (million barrels of oil equivalent)

222.3

159.4

158.6

Alumina (‘000 tonnes)

4,152

4,010

3,841

Aluminium (‘000 tonnes)

1,153

1,246

1,241

Copper cathode and concentrate (‘000 tonnes)

1,094.5

1,139.4

1,075.2

Nickel (‘000 tonnes)

157.9

152.7

176.2

Iron ore (‘000 tonnes)

159,478

134,406

124,962

Manganese alloys (‘000 tonnes)

602

753

583

Manganese ores (‘000 tonnes)

7,931

7,093

6,124

Metallurgical coal (‘000 tonnes)

33,230

32,678

37,381

Energy coal (‘000 tonnes)

71,111

69,500

66,131

(a) Further details appear in section 2.3 of this Report.





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1.5 Our risks

1.5.1 Risk factors

We believe that, because of the international scope of our operations and the industries in which we are engaged, there are numerous factors which may have an effect on our results and operations. The following describes the material risks that could affect the BHP Billiton Group.

External risks

Fluctuations in commodity prices and impacts of ongoing global economic volatility may negatively affect our results

The prices we obtain for our oil, gas, minerals and other commodities are determined by, or linked to, prices in world markets, which have historically been subject to substantial volatility. Our usual policy

is to sell our products at the prevailing market prices. The diversity provided by our broad portfolio of commodities does not fully insulate the effects of price changes. Fluctuations in commodity prices can occur due to sustained price shifts reflecting underlying global economic and geopolitical factors, industry demand and supply balances, product substitution and national tariffs. The ongoing global economic volatility following the global financial and European sovereign debt crises has negatively affected commodity market prices and demand. Sales into European countries generated US$8.4 billion (FY2011: US$9.4 billion), or 11.6 per cent (FY2011:

13.1 per cent), of our revenue in the year ended 30 June 2012. The ongoing uncertainty and impact on global economic growth, particularly in the developed economies, may adversely affect

future demand and prices for commodities. The impact of potential longer-term sustained price shifts and shorter-term price volatility creates the risk that our financial and operating results and asset values will be materially and adversely affected by unforeseen declines in the prevailing prices of our products.

Our financial results may be negatively affected by currency exchange rate fluctuations

Our assets, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the countries in which we operate. Fluctuations in the exchange rates of those currencies may have a significant impact on our financial results.

The US dollar is the currency in which the majority of our sales

are denominated. Operating costs are influenced by the currencies of those countries where our mines and processing plants are located and also by those currencies in which the costs of imported equipment and services are determined. The Australian dollar, South African rand, Chilean peso, Brazilian real and US dollar

are the most important currencies influencing our operating costs. The appreciation in recent years of currencies in which the majority of our operating costs are incurred, (in particular the Australian dollar, if sustained relative to US dollar denominated commodity prices), has and may continue to adversely impact our profit margins. Given the dominant role of the US currency in our

affairs, the US dollar is the currency in which we present financial performance. It is also the natural currency for borrowing and holding surplus cash. We do not generally believe that active currency hedging provides long-term benefits to our shareholders. From time to time, we consider currency protection measures appropriate in specific commercial circumstances, subject to strict limits established by our Board. Therefore, in any particular year, our financial results may be negatively affected by currency exchange rate fluctuations.

Reduction in Chinese demand may negatively impact our results The Chinese market has become a significant source of global demand for commodities. In CY2011, China represented 61 per cent of global

seaborne iron ore demand, 39 per cent of copper demand, 40 per cent of nickel demand, 43 per cent of aluminium demand, 48 per cent of energy coal demand and 10 per cent of oil demand. China’s demand for these commodities has been driving global materials demand and price increases over the past decade. Sales into China generated US$21.6 billion (FY2011: US$20.3 billion), or 29.9 per cent (FY2011:

    1. per cent), of our revenue in the year ended 30 June 2012.

      A slowing in China’s economic growth could result in lower prices and demand for our products and negatively impact our results.

      In response to its increased demand for commodities, China is increasingly seeking strategic self-sufficiency in key commodities, including investments in existing businesses or new developments in other countries. These investments may adversely impact future commodity demand and supply balances and prices.

      Actions by governments or political events in the countries in which we operate could have a negative impact on our business We have operations in many countries around the globe, which have varying degrees of political and commercial stability. We operate

      in emerging markets, which may involve additional risks that could have an adverse impact upon the profitability of an operation.

      These risks could include terrorism, civil unrest, nationalisation, renegotiation or nullification of existing contracts, leases, permits

      or other agreements, restrictions on repatriation of earnings or capital and changes in laws and policy, as well as other unforeseeable risks.

      Risks relating to bribery and corruption, including possible delays or disruption resulting from a refusal to make so-called facilitation


      BHP BILLITON ANNUAL REPORT 2012 | 7

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      1 Key information continued



      1.5.1 Risk factors continued

      payments, may be prevalent in some of the countries in which we operate. If any of our major projects are affected by one or more of these risks, it could have a negative effect on the operations

      in those countries, as well as the Group’s overall operating results and financial condition.

      Our operations are based on material long-term investments that anticipate long-term fiscal stability. Following the global financial and European sovereign debt crises, some governments face increased debt and funding obligations and have sought additional sources of revenue and economic rent by increasing rates of taxation, royalties or resource rent taxes such as the Minerals Resource Rent Tax (MRRT) and Petroleum Resource Rent Tax (PRRT) extension in Australia. These may continue to levels that are globally uncompetitive to the resource industry. Such taxes may negatively impact the financial results of existing businesses and reduce

      the anticipated future returns and overall level of prospective investment in those countries.

      The Australian Government through the Business Tax Working Group is considering measures to reform tax law to provide relief for certain industry sectors. The basis of any law change is a revenue neutral outcome and as such, it is possible the mining and petroleum industries may be negatively impacted

      by disproportionately funding any measures that may eventually become law. The Business Tax Working Group will make its recommendations to the Australian government by the end

      of CY2012, with any potential law change happening thereafter.

      Our business could be adversely affected by new government regulations, such as controls on imports, exports and prices. Increasing requirements relating to regulatory, environmental and social approvals can potentially result in significant delays in construction and may adversely affect the economics of new mining and oil and gas projects, the expansion of existing operations and results of our operations.

      We have oil and gas operations located in the Gulf of Mexico region of the United States. In October 2010, the United States Government lifted the deepwater drilling moratorium in the Gulf of Mexico initially put in place in May 2010 in response to the oil spill from BP’s Macondo well. Although the moratorium was lifted, and BHP Billiton was among the first to return to drilling in the Gulf of Mexico, the industry now faces more stringent permitting requirements. Delays or additional costs may occur in receiving

      future permits for deepwater drilling activities in the Gulf of Mexico.

      Infrastructure, such as rail, ports, power and water, is critical to our business operations. We have operations or potential development projects in countries where government provided infrastructure or regulatory regimes for access to infrastructure, including our own privately operated infrastructure, may be inadequate or uncertain. These may adversely impact the efficient operations and expansion of our businesses. On 30 June 2010, the Australian Competition Tribunal granted declaration of BHP Billiton’s Goldsworthy rail line, but rejected the application for declaration of our Newman rail line under Part IIIA of the Trade Practices Act. Following the Tribunal’s decision, access seekers may now negotiate for access to the Goldsworthy railway. These negotiations, and the availability

      and terms of access, are governed by the Part IIIA statutory framework, and either the access seeker or BHP Billiton can refer disputed matters to the Australian Competition and Consumer Commission for arbitration. The outcome of this process will govern whether access will be provided and on what terms.

      We operate in several countries where ownership of land is uncertain and where disputes may arise in relation to ownership. In Australia, the Native Title Act (1993) provides for the establishment and recognition of native title under certain circumstances. In South Africa, the Extension of Security of Tenure Act (1997) and the Restitution of Land Rights Act (1994) provide for various landholding rights. Such legislation could negatively affect new or existing projects.


      Our Cerro Matoso Operation in Colombia operates under mining concessions that are due to expire on 30 September 2012 and we have applied, in accordance with the law and its contracts, for an extension of these mining concessions. If this extension is not granted, Cerro Matoso has an underlying agreement with the Colombian Government that grants it rights to continue mining and producing through to 2029 under a lease arrangement, with

      a further extension of 15 years possible. While our operating rights are maintained, there is no established precedent in Colombia

      for bringing a reversion of title under contract and therefore the situation remains uncertain.

      These regulations are complex, difficult to predict and outside

      of our control and could negatively affect our business and results.

      Business risks

      Failure to discover new reserves, maintain or enhance existing reserves or develop new operations could negatively affect our future results and financial condition

      The demand for our products and production from our operations results in existing reserves being depleted over time. As our revenues and profits are derived from our oil and gas and minerals operations, our results and financial condition are directly related to the success of our exploration and acquisition efforts, and our ability to replace existing reserves. Exploration activity occurs adjacent to established operations and in new regions, in developed and less developed countries. These activities may increase land tenure, infrastructure and related political risks. A failure in our ability to discover new reserves, enhance existing reserves or develop new operations

      in sufficient quantities to maintain or grow the current level of

      our reserves could negatively affect our results, financial condition and prospects.

      Future deterioration in commodities pricing may make drilling some acreage and existing reserves uneconomic. Our actual drilling activities and future drilling budget will depend on drilling results,

      commodity prices, drilling and production costs, availability of drilling services and equipment, lease expirations, gathering system pipeline transportation and other infrastructure constraints, regulatory approvals and other factors.

      There are numerous uncertainties inherent in estimating ore and oil and gas reserves, and geological, technical and economic assumptions that are valid at the time of estimation may change significantly when new information becomes available. The uncertain global financial outlook may affect economic assumptions related to reserve recovery and require reserve restatements. Reserve restatements could negatively affect

      our results and prospects.

      We may not be able to successfully complete acquisitions or integrate our acquired businesses

      We have grown our business in part through acquisitions.

      We expect that some of our future growth will stem from acquisitions. There are numerous risks encountered in business combinations.

      These include adverse regulatory conditions and obligations, commercial objectives not achieved due to minority interests, unforeseen liabilities arising from the acquired businesses, retention of key staff, sales revenues and operational performance not meeting our expectations, anticipated synergies and cost savings being delayed or not being achieved, uncertainty in sales proceeds from planned divestments, and planned acquisition projects being cancelled, delayed or costing more than anticipated. These factors could negatively affect our future results and financial condition.

      We may not be able to attract and retain the necessary people Our existing operations and especially our pipeline of development projects in regions of numerous large projects, such as Western

      Australia, Queensland and the United States, if activated, require many highly skilled staff with relevant industry and technical experience. In the competitive labour markets that exist in these regions, the inability of the Group to attract and retain such people may adversely impact our ability to complete projects under


      8 | BHP BILLITON ANNUAL REPORT 2012

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      1.5.1 Risk factors continued

      development on time and budget or successfully respond to new development opportunities. The lack of short- and long-term suitable accommodation in regional centres and townships adjacent to development projects and community reactions to development and potential workforce fly in, fly out arrangements may impact costs and the ability to optimise construction and operating workforces. Skills shortages in engineering, technical service, construction and maintenance may adversely impact the cost

      and schedule of current development projects, the cost and efficiency of existing operations and our ability to execute on development opportunities.

      Increased costs and schedule delays may adversely affect our development projects

      Although we devote significant time and resources to our project planning, approval and review process, and have established a number of project hubs to provide continuity to capital programs, we may underestimate the cost or time required to complete

      a project. In addition, we may fail to manage projects as effectively as we anticipate and unforeseen challenges may emerge.

      Any of these may result in increased capital costs and schedule delays at our development projects, adversely affecting our development projects and impacting anticipated financial returns.

      Financial risks

      If our liquidity and cash flow deteriorate significantly it could adversely affect our ability to fund our major capital programs We seek to maintain a solid ‘A’ credit rating as part of our strategy; however, fluctuations in commodity prices and the ongoing global

      economic volatility, and European sovereign debt crises, may continue to adversely impact our future cash flows and ability to access capital from financial markets at acceptable pricing.

      Despite our portfolio risk management strategies and monitoring of cash flow volatility, if our key financial ratios and credit rating were not maintained, our liquidity and cash reserves, interest rate costs on borrowed debt, future access to financial capital markets and the ability to fund current and future major capital programs could be adversely affected.

      We may not recover our investments in mining and oil and gas projects

      Our strategy is to maintain an asset portfolio diversified

      by commodity, geography and market. Despite the benefits arising from this diversification, one or more of our assets may

      be impacted by changed market or industry structures, commodity prices, technical operating difficulties, inability to recover our mineral, oil or gas reserves and increased operating cost levels. These may cause us to fail to recover all or a portion of our investment in mining and oil and gas projects and may require financial write-downs adversely impacting our financial results.

      The commercial counterparties we transact with may not meet their obligations which may negatively impact our results We contract with a large number of commercial and financial counterparties, including customers, suppliers and financial

      institutions. The ongoing global economic volatility and European sovereign debt crises have placed strains on global financial markets, reduced liquidity and adversely affected business conditions generally. We maintain a ‘one book’ approach with commercial counterparties to ensure that all credit exposures

      are quantified. Our existing counterparty credit controls may not prevent a material loss due to credit exposure to a major customer or financial counterparty. In addition, customers, suppliers, contractors or joint venture partners may fail to perform against existing contracts and obligations. Non-supply of key inputs, such as tyres, mining and mobile equipment and other key consumables, may unfavourably impact costs and production at our operations. These factors could negatively affect our financial condition and results of operations.

      Operational risks


      1

      Key information


      2

      Information on the Company


      3 Operating and financial review and prospects


      4 Board of Directors and

      Group Management Committee


      5

      Corporate Governance Statement


      6

      Remuneration Report

      Operating cost pressures, reduced productivity and labour shortages could negatively impact our operating margins and expansion plans

      Increasing cost pressures and shortages in skilled personnel, contractors, materials and supplies that are required as critical inputs to our existing operations and planned developments have occurred and may continue to occur across the resources industry. As the prices for our products are determined by the global commodity markets in which we operate, we do not generally have the ability to offset these operating cost increases through corresponding price increases, which can adversely affect our operating margins. Notwithstanding our efforts to reduce costs and a number of key cost inputs being commodity price-linked, the inability to reduce costs and a timing lag may adversely impact our operating margins for an extended period.

      Our Australian-based operations may continue to be affected

      by the Australian Fair Work Act 2009 as labour agreements expire and businesses are required to negotiate labour agreements with unions. In some instances labour unions are pursuing claims in the bargaining process about union access and involvement in some areas of operational decision-making. These claims may adversely affect workplace flexibility, productivity and costs. Industrial action in pursuit of claims associated with the bargaining process

      has occurred in some businesses, in particular our BHP Billiton Mitsubishi Alliance coal operation in Queensland, Australia, and is likely to continue to occur as unions press for new claims as part of the negotiation process.

      A number of our operations, such as aluminium and copper, are energy or water intensive and, as a result, the Group’s costs and earnings could be adversely affected by rising costs or by supply interruptions. These could include the unavailability of energy, fuel or water due to a variety of reasons, including fluctuations

      in climate, significant increases in costs, inadequate infrastructure capacity, interruptions in supply due to equipment failure or

      other causes and the inability to extend supply contracts on economical terms.

      These factors could lead to increased operating costs at existing operations and could negatively impact our operating margins and expansion plans.

      Unexpected natural and operational catastrophes may adversely impact our operations

      We operate extractive, processing and logistical operations in many geographic locations both onshore and offshore. Our operational processes may be subject to operational accidents such as port

      and shipping incidents, underground mine and processing plant fire and explosion, open-cut pit wall failures, loss of power supply, railroad incidents, loss of well control, environmental pollution and mechanical critical equipment failures. Our key port facilities are located at Port Hedland and Hay Point in Australia. We have 13 underground mines, including seven underground coal mines.

      Our operations may also be subject to unexpected natural catastrophes such as earthquakes, flood, hurricanes and tsunamis. Our Western Australia Iron Ore, Queensland coal and Gulf of Mexico oil and gas operations are located in areas subject to cyclones or hurricanes. Our Chilean copper operations are located in a known earthquake and tsunami zone. Based on our claims, insurance premiums and loss experience, our risk management approach is not to purchase insurance for property damage, business interruption and construction related risk exposures. Existing business continuity plans may not provide protection for all of the costs that arise from such events. The impact of these events could lead to disruptions in production, increased costs and loss of facilities more than offsetting premiums saved, which would adversely affect our financial results and prospects. Third party claims arising from these events may exceed the limit of liability insurance policies we have in place.


      BHP BILLITON ANNUAL REPORT 2012 | 9

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      1 Key information continued



      1.5.1 Risk factors continued

      Our non-controlled assets may not comply with our standards Some of our assets are controlled and managed by joint venture partners or by other companies. Management of our non-controlled

      assets may not comply with our management and operating standards, controls and procedures (including our HSEC standards).

      Failure to adopt equivalent standards, controls and procedures

      at these assets could lead to higher costs and reduced production and adversely impact our results and reputation.

      Breaches in our information technology security processes may adversely impact the conduct of our business activities We maintain global information technology (IT) and communication networks and applications to support our business activities.

      Our extensive IT infrastructure and network may experience service outages that may adversely impact the conduct of our business activities. IT security processes protecting these systems are in place and subject to regular monitoring and assessment, and are included as part of the review of internal control over financial reporting.

      These security processes may not prevent future malicious action or fraud by individuals, groups or organisations resulting in the corruption of operating systems, theft of commercially sensitive data, including commercial price outlooks, mergers and acquisitions and divestment transactions, misappropriation of funds and disruptions to our business operations.

      Sustainability risks

      HSEC impacts, incidents or accidents and related regulations may adversely affect our people, operations and reputation or licence to operate

      We are a major producer of carbon-related products such as energy and metallurgical coal, oil, gas, and liquefied natural gas. Our oil and gas operations are both onshore and offshore.

      The nature of the industries in which we operate means that many of our activities are highly regulated by health, safety and environmental laws. As regulatory standards and expectations are constantly developing, we may be exposed to increased litigation, compliance costs and unforeseen environmental rehabilitation expenses.

      Potential safety events that may have a material adverse impact on our operations include fire, explosion or rock fall incidents in underground mining operations, personnel conveyance equipment failures in underground operations, aircraft incidents, incidents involving light vehicles and mining mobile equipment, ground control failures, well blowouts, explosions or gas leaks, isolation, working from heights or lifting operations.

      Environmental incidents that have the potential to create a material impact include uncontrolled tailings breaches, subsidence from mining activities, escape of polluting substances and uncontrolled releases of hydrocarbons.

      Our operations by their nature have the potential to impact biodiversity, water resources and related ecosystem services. Changes in scientific understanding of these impacts, regulatory requirements or stakeholder expectations may prevent or delay project approvals and result in increased costs for mitigation, offsets or compensatory actions.

      We provide for operational closure and site rehabilitation.

      Our operating and closed facilities are required to have closure plans. Changes in regulatory or community expectations may result in the relevant plans not being adequate. This may impact financial provisioning and costs at the affected operations.


      We contribute to the communities in which we operate by providing skilled employment opportunities, salaries and wages,

      taxes and royalties and community development programs, including a commitment to one per cent of pre-tax profits invested in community programs. Notwithstanding these actions, local communities may become dissatisfied with the impact of our operations or oppose our new development projects, including through litigation, potentially affecting costs and production, and in extreme cases viability.

      Community related risks may include community protests or civil unrest, delays to proposed developments and inadvertent breaches of human rights or other international laws or conventions.

      Health risks faced include fatigue and occupational exposure

      to noise, silica, manganese, diesel exhaust particulate, fluorides, coal tar pitch, nickel and sulphuric acid mist. Longer-term health impacts may arise due to unanticipated workplace exposures

      or historical exposures to hazardous substances by employees or site contractors. These effects may create future financial compensation obligations.

      We invest in workplace and community health programs, where indicated by risk assessment. However, infectious diseases such as HIV and malaria may have a material adverse impact upon our workers or on our communities, primarily in Africa. Because we operate globally, we may be affected by potential pandemic influenza outbreaks, such as A(H1N1) and avian flu, in any of the regions in which we operate.

      Legislation requiring manufacturers, importers and downstream users of chemical substances, including metals and minerals,

      to establish that the substances can be used without negatively affecting health or the environment may impact our operations and markets. These potential compliance costs, litigation expenses, regulatory delays, rehabilitation expenses and operational costs could negatively affect our financial results.

      During FY2011, BHP Billiton acquired Chesapeake Energy Corporation’s interests in the Fayetteville Operation in the United States, and in August 2011, acquired Petrohawk Energy Corporation, a US shale development company. Both businesses include operations that involve hydraulic fracturing, an essential and common practice

      in the oil and gas industry to stimulate production of natural gas and oil from dense subsurface rock formations. Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation to allow flow

      of hydrocarbons into the wellbore. We routinely apply hydraulic fracturing techniques in our drilling and completion programs.

      Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques, including regulations that could impose more stringent permitting, public disclosure and well construction requirements on hydraulic fracturing operations. Additional legislation or regulation could also lead to operational delays or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult to perform hydraulic fracturing. The adoption of any federal, state or local laws or the implementation of regulations regarding hydraulic fracturing could potentially cause

      a decrease in the completion of new oil and gas wells, increased compliance costs and time, and potential class action claims,

      all of which could adversely affect our business.

      Due to the nature of our operations HSEC incidents or accidents and related regulations may adversely affect our reputation

      or licence to operate.



      10 | BHP BILLITON ANNUAL REPORT 2012

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          1. Risk factors continued

            Climate change and greenhouse effects may adversely impact our operations and markets

            Carbon-based energy is a significant input in a number of the Group’s mining and processing operations and we have significant sales of carbon-based energy products.

            A number of governments or governmental bodies have introduced or are contemplating regulatory change in response to the impacts of climate change. Under the December 2009 Copenhagen Accord, developed countries established individual greenhouse gas targets and developing countries established national mitigation actions. The European Union Emissions Trading System (EU ETS), which came into effect on 1 January 2005, has had an impact on greenhouse gas and energy-intensive businesses based in the EU. Our Petroleum assets in the United Kingdom are currently subject to the EU ETS, as are our EU based customers. Elsewhere, there is current and emerging climate change regulation that will affect energy prices, demand and margins for carbon intensive products. The Australian Government’s plan of action on climate change, which commenced on 1 July 2012, includes a fixed price on carbon emissions and converting to an emissions trading scheme after three years, and

            a mandatory renewable energy target of 20 per cent by the year 2020. From a medium to long-term perspective, we are likely to see some changes in the cost position of our greenhouse-gas-intensive assets and energy-intensive assets as a result of regulatory impacts in the countries in which we operate. These proposed regulatory mechanisms may impact our operations directly or indirectly through our suppliers and customers. Inconsistency of regulations particularly between developed and developing countries may also change

            the competitive position of some of our assets. Assessments of the potential impact of future climate change regulation are uncertain given the wide scope of potential regulatory change in the many countries in which we operate. The South African Government plans to introduce a carbon tax beginning in 2013, however the details are not yet finalised. Carbon pricing has also been discussed as part of a broader tax reform package in Chile.

            The physical impacts of climate change on our operations are highly uncertain and will be particular to the geographic circumstances. These may include changes in rainfall patterns, water shortages, rising sea levels, increased storm intensities and higher average temperature levels. These effects may adversely impact the productivity and financial performance of our operations.

            A breach of our governance processes may lead to regulatory penalties and loss of reputation

            We operate in a global environment straddling multiple jurisdictions and complex regulatory frameworks. Our governance and compliance processes, which include the review of internal control over financial reporting and specific internal controls in relation to offers of things of value to government officials and representatives of state owned enterprises, may not prevent future potential breaches of law, accounting or governance practice.

            The BHP Billiton Code of Business Conduct, together with our mandatory policies, such as the anti-corruption and the anti-trust policies, may not prevent instances of fraudulent behaviour and dishonesty nor guarantee compliance with legal or regulatory requirements. This may lead to regulatory fines, litigation, loss of operating licences or reputational damage.

          2. Approach to risk management


            1

            Key information


            2

            Information on the Company


            3 Operating and financial review and prospects


            4 Board of Directors and

            Group Management Committee


            5

            Corporate Governance Statement


            6

            Remuneration Report

            We believe that the identification and management of risk

            is central to achieving our corporate purpose of creating long-term shareholder value.

            Our approach to risk recognises that it will manifest itself in many forms and has the potential to impact our health and safety, environment, community, reputation, regulatory, market and financial performance and, thereby, the achievement

            of our corporate purpose.

            By understanding and managing risk, we provide greater certainty and confidence for our shareholders, employees, customers, suppliers, and for the communities in which

            we operate. Successful risk management can be a source of competitive advantage.

            Risks faced by the Group are managed on an enterprise-wide basis. The natural diversification in the Group’s portfolio of commodities, geographies, currencies, assets and liabilities is a key element in our risk management approach.

            Risk management is embedded in our critical business activities, functions and processes. Materiality and our tolerance for risk are key considerations in our decision-making.

            Risk issues are identified, analysed and assessed in a consistent manner. Performance requirements exist for the identification, assessment, control and monitoring of material risk issues

            that could threaten our corporate purpose and business plans. These include:

            • The potential for impacts on the achievement of our corporate purpose and business plans is identified through risk assessments using approved materiality and tolerability criteria. The severity of any risk event is assessed according to a matrix that describes the degree of harm, injury or loss from the most severe impact

              associated with that risk event, assuming reasonable effectiveness of controls.

            • A risk assessment (risk identification, risk analysis and risk evaluation) is conducted for material risk issues.

            • Risk controls are designed, implemented, operated and assessed to produce a residual risk that is tolerable. Performance standards are established for critical controls over material risks with supporting monitoring and verification processes.

            The Group has established processes that apply when entering

            or commencing new activities in higher governance risk countries. Risk assessments and a supporting risk management plan are required to ensure that potential reputation, legal, business conduct and corruption-related exposures are tolerable and legislative compliance is maintained, including relevant anti-corruption legislation and the application of any sanctions or trade embargos.

            Our risk management governance approach is described in sections 5.13.1 and 5.14.


            BHP BILLITON ANNUAL REPORT 2012 | 11

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            1 Key information continued


          3. Management of principal risks

            The scope of our operations and the number of industries in which we operate and engage mean that a range of factors may impact our results. Material risks that could negatively affect our results and performance are described in section 1.5.1 of this Report. Our approach to managing these risks is outlined below.


            image

            image

            Principal risk area Risk management approach

            External risks

            Risks arise from fluctuations in commodity prices and currency exchange rates, demand changes in major markets (such as China or Europe)

            or actions by governments and political events that impact long-term fiscal stability.


            image

            Business risks

            Our continued growth creates risks related to identifying and proving reserves, integrating newly acquired businesses, managing our capital development projects and attracting and retaining the people necessary to support our growth.


            image

            Financial risks

            Continued volatility in global financial markets may adversely impact future cash flows, the ability to adequately access and source capital from financial markets and our credit rating. This may impact planned expenditures as well as the ability to recover investments in mining and oil and gas projects. In addition, the commercial counterparties (customers, suppliers and financial institutions) we transact with may, due to adverse market conditions, not meet their obligations.


            image

            Operational risks

            Operating cost pressures, reduced productivity and labour shortages could negatively impact operating margins and expansion plans.

            Non-controlled assets may not comply with our standards. Unexpected natural and operational catastrophes may adversely impact our operations. Breaches in information technology (IT) security processes may adversely impact the conduct of our business activities.

            The diversification of our portfolio of commodities, geographies and currencies is a key strategy for reducing volatility. Section 3.4 describes external factors and trends affecting our results and Note 28 to the financial statements outlines the Group’s financial risk management strategy, including market, commodity, and currency risk. The Financial Risk Management Committee oversees these as described in section

              1. We engage with governments and other key stakeholders to ensure the potential impacts of proposed fiscal, tax, resource investment, infrastructure access and regulatory changes are understood and

                where possible mitigated.

                We support our growth strategy through minerals and petroleum exploration programs which are focused on identifying and capturing new world-class projects supported by exploration activity adjacent to existing operations. The Group Resource and Business Optimisation function provides governance and technical leadership for resource development and Ore Reserves reporting as described in section 2.13.2

                Reserves and Resources and section 2.6 Group Resources and Business Optimisation. Our Petroleum reserves are described in section 2.13.1. We have established investment processes and tollgates that apply to

                all major capital and mergers and acquisitions projects. The Investment

                Committee oversees these as described in section 5.15. The Project Management function additionally ensures that the optimum framework and capabilities are in place to deliver safe, predictable and competitive projects. Additionally we have established project hubs as operating centres for the study and execution of a pipeline of major capital projects using a program management approach.

                Group-wide human resource processes are established covering recruitment planning, diversity, remuneration, development and mobility of staff to ensure we continue to maintain a strong diversified global talent pool.

                We seek to maintain a solid ‘A’ credit rating, supported by our portfolio risk management strategy. As part of this strategy, commodity prices and currency exchange rates are not hedged and, wherever possible we take the prevailing market price, which serves to mitigate counterparty performance risk. We use cash flow at risk analysis to monitor volatilities and key financial ratios. Credit limits and review processes are established for all customers and financial counterparties. The Financial Risk Management Committee oversees these as described in section 5.15.

                Note 28 to the financial statements outlines our financial risk management strategy.

                We seek to ensure that adequate operating margins are maintained through our strategy to own and operate large, long-life, low-cost and expandable upstream assets. We have implemented an Operating

                Model designed to deliver a simple and scalable organisation, providing a competitive advantage through defining work, organisation and performance measurement. Defined global business processes, including 1SAP, provide a standardised way of working across the organisation.

                Common processes generate reliable data and improve operating discipline. Global sourcing arrangements have been established to ensure continuity of supply and competitive costs for key supply inputs. We seek to influence non-controlled assets to apply to our standards.

                Through the application of our risk management processes, we identify material catastrophic operational risks and implement the critical controls and performance requirements to maintain control effectiveness. Business continuity plans are established to mitigate consequences.

                Consistent with our portfolio risk management approach, we continue to be largely self-insured for losses arising from property damage, business interruption and construction.

                We maintain appropriate IT security devices, perimeter monitoring and mobile device protective measures. Security crisis management, incident management and service continuity and disaster recovery plans are established.


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                12 | BHP BILLITON ANNUAL REPORT 2012

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                1

                Key information


                2

                Information on the Company


                3 Operating and financial review and prospects


                4 Board of Directors and

                Group Management Committee


                5

                Corporate Governance Statement


                6

                Remuneration Report

                1.5.3 Management of principal risks continued

                image

                image

                Principal risk area Risk management approach

                Sustainability risks

                HSEC incidents or accidents and related regulations may adversely affect our people, operations and reputation or licence to operate. The potential physical impacts and related government regulatory responses to climate change and greenhouse effects may adversely impact our operations and markets. Given that we operate in a challenging global environment straddling multiple jurisdictions,

                a breach of our governance processes may lead to regulatory penalties and loss of reputation.

                Our approach to sustainability risks is reflected in Our BHP Billiton Charter and described in section 2.8. A comprehensive set of Group Level Documents (GLDs) set out Group-wide HSEC-related performance requirements

                to ensure effective management control of these risks.

                The BHP Billiton Code of Business Conduct sets out requirements related to working with integrity, including dealings with government officials and third parties. Processes and controls are in place

                for the financial control over financial reporting, including under Sarbanes-Oxley. We have established anti-corruption and anti-trust related performance requirements overseen by the Legal and Compliance function. The Disclosure Committee oversees our compliance with securities dealing obligations and continuous and periodic disclosure obligations.


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                1.6 Forward looking statements

                This Report contains forward looking statements, including statements regarding:

                • trends in commodity prices and currency exchange rates;

                • demand for commodities;

                • plans, strategies and objectives of management;

                • closure or divestment of certain operations or facilities (including associated costs);

                • anticipated production or construction commencement dates;

                • capital costs and scheduling;

                • operating costs and shortages of materials and skilled employees;

                • anticipated productive lives of projects, mines and facilities;

                • provisions and contingent liabilities;

                • tax and regulatory developments.

            Forward looking statements can be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward looking statements.

            These forward looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release.

            Readers are cautioned not to put undue reliance on forward looking statements.

            For example, our future revenues from our operations, projects or mines described in this Report will be based, in part, upon the market price of the minerals, metals or petroleum products produced, which may vary significantly from current levels.

            These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.

            Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals, petroleum

            or metals we produce; activities of government authorities in some of the countries where we are exploring or developing these projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; labour unrest; and other factors identified in the risk factors described in section 1.5.1.

            We cannot assure you that our estimated economically recoverable reserve figures, closure or divestment of such operations or facilities, including associated costs, actual production or commencement dates, cost or production output or anticipated lives of the projects, mines and facilities discussed in this Annual Report, will not differ materially from the statements contained in this Annual Report.

            Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or review any forward looking statements, whether as a result of new information or future events.


            BHP BILLITON ANNUAL REPORT 2012 | 13

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            1. Information on the Company


              1. BHP Billiton locations

                Petroleum

                image

                image

                Ref Country Fields Description Ownership


                Aluminium (b)

                image

                image

                Ref Country Asset Description Ownership

                1 Algeria ROD Integrated

                image

                Development (a)

                Onshore oil production 38%

                1. Australia Worsley Integrated alumina refinery

                  and bauxite mine in

                  86%

                  1. Australia Bass Strait (a) Offshore Victoria oil, condensate, LPG,

                    image

                    natural gas and ethane production

                  2. Australia Minerva Offshore Victoria natural gas and condensate

                    50%


                    90%

                    Western Australia

                    image

                2. Brazil Alumar (a) Integrated alumina refinery and

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                  aluminium smelter


                  36–40%


                  4 Australia North West

                  Shelf (a)

                  production

                  image

                  Offshore Western Australia oil, condensate, LPG, natural gas and LNG production


                  8.3–16.7%

                3. Brazil Mineração Rio do Norte (a)

                  An open-cut bauxite mine 14.8%

                  image

                  image

                  image

                  5 Australia Pyrenees Offshore Western Australia oil production 40–71.4%

                4. Mozambique Mozal An aluminium smelter, located

                  47.1%

                  6 Australia Stybarrow Offshore Western Australia oil and

                  gas production

                  50%


                  image

                5. South Africa Aluminium

                near Maputo

                image

                Hillside and Bayside aluminium


                100%


                image

                image

                1. Pakistan Zamzama Onshore natural gas and condensate production 38.5%

                  South Africa

                  smelters, located at Richards Bay

                2. Trinidad and Tobago

                  Angostura Offshore oil and natural gas production 45%

                  Stainless Steel Materials (b)

                  image


                  9

                  UK

                  Bruce/Keith/

                  Offshore North Sea and Irish Sea oil and


                  Ref

                  Country

                  Asset

                  Description

                  Ownership



                  Liverpool Bay

                  natural gas production


                  17

                  Australia

                  Nickel West

                  Mt Keith and Leinster

                  100%

                  10

                  US

                  Gulf of Mexico

                  Offshore oil, LPG and natural gas production from





                  Kalgoorlie nickel smelter,





                  several fields





                  Kambalda nickel









                  concentrator and the









                  Kwinana nickel refinery


                  11

                  US

                  Onshore US

                  Onshore shale gas and liquids in Arkansas, <1–100%


                  18

                  Colombia

                  Cerro

                  Integrated laterite

                  99.9%




                  Louisiana and Texas




                  Matoso

                  ferronickel mining and









                  smelting operation









                  in northern Colombia


                  • Bruce (a) 16% • Keith 31.8% • Liverpool Bay 46.1%

                  • Atlantis (a) 44% • Genesis (a) 5% • Mad Dog (a) 23.9%

                  • Neptune 35% • Shenzi 44%

                  • Eagle Ford • Fayetteville

                  • Haynesville • Permian

                  nickel-sulphide mines,


                  image

                  image

                  image

                  25


                  42


                  BHP Billiton principal office locations


                  Ref

                  Country

                  Location

                  Office

                  37

                  Australia

                  Adelaide

                  Uranium Head Office

                  38

                  Australia

                  Brisbane

                  Metallurgical Coal Head Office

                  39

                  Australia

                  Melbourne

                  Global Headquarters

                  40

                  Australia

                  Perth

                  Aluminium (b) and Stainless Steel Materials (b) Head Offices Iron Ore Head Office

                  41

                  Australia

                  Sydney

                  Energy Coal Head Office

                  42

                  Canada

                  Saskatoon

                  Diamonds and Specialty Products Head Office

                  43

                  Chile

                  Santiago

                  Base Metals Head Office

                  44

                  Malaysia

                  Kuala Lumpur

                  Global Shared Services Centre

                  45

                  Singapore

                  Singapore

                  Marketing Head Office

                  Minerals Exploration Head Office

                  46

                  South Africa

                  Johannesburg

                  Manganese Head Office

                  47

                  UK

                  London

                  Corporate Office

                  48

                  US

                  Houston

                  Petroleum Head Office

                  36

                  23 48 11

                  10



                  Offices Operations


                  1. Jointly or non-operated BHP Billiton Assets or Fields.

                  2. Aluminium and Stainless Steel Materials form the Aluminium and Nickel Customer Sector Group.

                  3. Uranium is part of the Base Metals Customer Sector Group. Projects and exploration activities are not shown on this map. Locations are current at 10 September 2012.

                  8

                  34

                  18


                  14 13

                  22


                  20 27

                  21


                  43


                  14 | BHP BILLITON ANNUAL REPORT 2012

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                  Base Metals

                  image

                  image

                  Ref Country Asset Description Ownership


                  Manganese

                  image

                  Ref Country Asset Description Ownership

                  image

                  1. Australia Cannington Underground silver, lead and zinc mine,

                    image

                    located in northwest Queensland

                  2. Chile Pampa Norte Cerro Colorado and Spence open-cut

                    image

                    mines producing copper cathode in the Atacama Desert, northern Chile

                  3. Chile Escondida Comprises the world’s largest copper

                  image

                  mine, concentrators and solvent extraction plants and port operations

                  100%


                  100%


                  57.5%

                  1. Australia Manganese Producer of manganese ore at GEMCO in the Australia Northern Territory and manganese alloys at

                    image

                    TEMCO in Tasmania

                  2. South Africa Manganese Mamatwan open-cut and Wessels South Africa underground manganese mines and

                    image

                    the Metalloys manganese alloy plant


                    Metallurgical Coal

                    60%


                    image

                    1

                    Key information

                    44.4–60%

                    1. Peru Antamina (a) A joint venture open-cut copper

                      33.8%

                      image

                      Ref Country Asset Description Ownership

                      image


                    2. US Base Metals

                      and zinc mine, located in the Andes

                      image

                      north-central Peru

                      Includes the Pinto Valley open-cut copper


                      100%

                  3. Australia Illawarra

                    Coal

                    Underground coal mines (West Cliff, Dendrobium, Appin) in southern New South Wales, with access to rail and port facilities

                    100%

                    image

                    North America

                    mine, located in Arizona

                  4. Australia BHP Billiton Saraji, Goonyella Riverside, Peak Downs,

                    50%

                    Uranium (c)

                    image

                    image

                    Ref Country Asset Description Ownership

                    image

                    image

                    Mitsubishi Alliance

                    Norwich Park, Gregory Crinum, Blackwater and Broadmeadow open-cut and underground mines in the Queensland Bowen Basin and Hay Point Coal Terminal

                    24 Australia Olympic

                    Dam

                    Large poly-metallic orebody and the

                    world’s largest uranium deposit, producing

                    100%

                  5. Australia BHP Billiton South Walker Creek and Poitrel open-cut coal Mitsui Coal mines in the Queensland Bowen Basin

                    80%

                    copper, uranium, gold and silver

                    image

                    Diamonds and Specialty Products

                    image

                    image

                    Ref Country Asset Description Ownership

                    Energy Coal

                    image

                    Ref Country Asset Description Ownership

                    image

                    25 Canada EKATI

                    Diamond Mine

                    Open-cut and underground diamond mines, located in the Northwest Territories of Canada

                    80%

                  6. Australia New South

                    image

                    Wales Energy Coal

                    Mt Arthur Coal open-cut mine 100%

                    image

                    Iron Ore

                    image

                    image

                    Ref Country Asset Description Ownership

                  7. Colombia Cerrejón (a) An open-cut coal mine, with integrated

                    image

                    rail and port operations

                    2

                    Information on the Company

                  8. South Africa Energy Coal Khutala, Middelburg, Klipspruit, Wolvekrans

                    33.3%


                    50–100%

                    26 Australia Western

                    Australia Iron Ore

                    Integrated iron ore mines (Area C, Jimblebar,

                    Yandi, Newman and Yarrie), and rail

                    and port operations in the Pilbara region

                    85–100%

                    South Africa open-cut and underground mines and coal processing operations

                    image

                  9. US New Mexico Navajo open-cut and San Juan


3 Operating and financial review and prospects

100%

of Western Australia

Coal

underground mines

image

27 Brazil Samarco (a) Open-cut mine that produces iron ore pellets 50%

image

image

Percentage ownership figures have been rounded to one decimal place.


image

4 Board of Directors and

Group Management Committee

9

47


1


5

Corporate Governance Statement

7


44

45



46 3515


4

6 5 26

28


6

Remuneration Report

19 31 32

38

29 16

40 17

12

24 33

37 41

39 30

3 2

28


BHP BILLITON ANNUAL REPORT 2012 | 15

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2 Information on the Company continued



    1. Business overview

      1. History and development

        Since 29 June 2001, we have operated under a Dual Listed Company (DLC) structure. Under the DLC structure, the two parent companies, BHP Billiton Limited (formerly BHP Limited and before that

        The Broken Hill Proprietary Company Limited) and BHP Billiton Plc (formerly Billiton Plc) operate as a single economic entity, run by a unified Board and management team. More details of the DLC structure are located under section 2.10 of this Report.

        BHP Billiton Limited was incorporated in 1885 and is registered in Australia with ABN 49 004 028 077. BHP Billiton Plc was incorporated in 1996 and is registered in England and Wales with registration number 3196209. Successive predecessor entities to BHP Billiton Plc have operated since 1860.

        The registered office of BHP Billiton Limited is 180 Lonsdale Street,

        Melbourne, Victoria 3000, Australia, and its telephone number is 1300 55 47 57 (within Australia) or +61 3 9609 3333 (outside Australia). The registered office of BHP Billiton Plc is Neathouse Place, London SW1V 1BH, United Kingdom, and its telephone number is +44 20 7802 4000. Our agent for service in the United States is Maria Isabel Reuter at 1360 Post Oak Boulevard, Suite 150, Houston, TX 77056.

      2. Petroleum Customer Sector Group

Our Petroleum Customer Sector Group (CSG) comprises a base

of onshore and offshore operations that are located in six countries throughout the world. We explore for significant upstream opportunities around the world.

Petroleum continues to invest through economic cycles and maintains a long-term view. The acquisition of Petrohawk Energy Corporation was completed in FY2012 at a purchase price of US$12.0 billion, excluding the assumption of net debt of US$3.8 billion, and provided us with operating positions in the Eagle Ford, Haynesville and Permian fields in the United States. Combined with our interests in the Fayetteville field, acquired from Chesapeake Energy Corporation in the third quarter of FY2011, oil and gas operations in these fields constitute our Onshore US business. We will continue to evaluate other commercial opportunities for growth, including through acquisitions, in the future.

During FY2012, total production increased by 40 per cent from the prior year to 222.3 million barrels of oil equivalent (MMboe).

Production from our Onshore US business, strong uptime performance from existing operated assets and the first full year of production from the Angostura gas facility (Trinidad and Tobago) largely offset reduced production caused by maintenance activity and adverse weather at our non-operated offshore Gulf of Mexico, United States, and North West Shelf, Australia, fields and natural field decline

at our operated Pyrenees facility.

We remain committed to organic growth opportunities through exploration, using the latest seismic and geophysical technology to locate new resources and yield results. In FY2012, we executed a major international drilling campaign focused on proven basins in Southeast Asia, Western Australia and the Gulf of Mexico.

Our production operations are as follows:

Bass Strait

Together with our 50–50 joint venture partner, Esso Australia

(a subsidiary of ExxonMobil), we have been producing oil and gas from Bass Strait, off the south-eastern coast of Australia, for over

40 years, having participated in the original discovery of hydrocarbons in 1965. We dispatch the majority of our Bass Strait crude oil and condensate production to refineries along the east coast of Australia. Gas is piped onshore to our Longford processing facility, from which we sell our production to domestic distributors under contracts with periodic price reviews.

North West Shelf

We are a joint venture participant in the North West Shelf Project in Western Australia. The North West Shelf Project was developed in phases: the domestic gas phase supplies gas to the Western Australian domestic market mainly under long-term contracts,


and a series of liquefied natural gas (LNG) expansion phases supplying LNG to buyers in Japan, Korea and China under a series of long-term contracts. The project also produces LPG and condensate.

We are also a joint venture participant in four nearby oil fields. Both the North West Shelf gas and oil ventures are operated by Woodside.

Australia operated

We operate two oil fields offshore Western Australia and one gas field in Victoria.

The Pyrenees oil development consists of three fields, two of which (Crosby and Stickle) are located in blocks WA-42-L (71.43 per cent interest), while the third (Ravensworth) straddles blocks WA-42-L and WA-43-L (40 per cent interest). The project uses a FPSO facility.

The Stybarrow operation (50 per cent BHP Billiton share) is an oil development located offshore Western Australia. The project uses a FPSO facility.

The Minerva operation (90 per cent BHP Billiton share) is a gas

field located offshore Victoria. The operation consists of two subsea producing wells which pipe gas onshore to a processing plant.

The gas is delivered into a pipeline and sold domestically.

Gulf of Mexico

We operate two fields in the Gulf of Mexico (Neptune and Shenzi) and hold non-operating interests in a further three fields (Atlantis, Mad Dog and Genesis). We divested our interest in the West Cameron and Starlifter areas in June 2012. We also own 25 per cent and

22 per cent, respectively, of the companies that own and operate the Caesar oil pipeline and the Cleopatra gas pipeline which transport oil and gas from the Green Canyon area, where a number of our fields are located, to connecting pipelines that transport product to the mainland. We deliver our oil production to refineries along the Gulf Coast of the United States.

Onshore US

We operate in four shale fields located onshore in the United States

– Fayetteville, Eagle Ford, Haynesville and Permian.

The combined leasehold acreage of the Onshore US fields is approximately 1.6 million net acres in the states of Texas,

Louisiana and Arkansas. Our ownership interests range from less than one per cent to 100 per cent. Working interest will change due to events such as a party’s non-consent election, or through farm-ins and farm-outs with other parties.

In FY2012, the Onshore US business delivered 6.9 million barrels of crude oil and condensates, 448 billion cubic feet of natural gas and 4.0 million barrels of natural gas liquids. Our Onshore US total production increased by 80 MMboe from 6 MMboe in FY2011 to

86 MMboe in FY2012, which more than accounted for the 63 MMboe increase in total production.

Due to the low price of US natural gas in FY2012, the capital expenditure in the Onshore US business in the second half

of the financial year was focused on the liquids-rich Eagle Ford and Permian fields, both in Texas. Consequently, we reduced the development of the dry gas assets in Haynesville and Fayetteville fields in the second half of FY2012. The mix of liquids and gas development opportunities in all four fields provides us with the flexibility to adjust our onshore development program towards those operations with the highest return on investment.

Liverpool Bay and Bruce/Keith

The Liverpool Bay, United Kingdom, integrated development consists of five producing offshore gas and oil fields in the Irish Sea, the Point of Ayr onshore processing plant in north Wales, and associated infrastructure. We deliver the Liverpool Bay

gas by pipeline to E.ON’s Connah’s Quay power station.

We own 46.1 per cent of and operate Liverpool Bay. We also hold a 16 per cent non-operating interest in the Bruce oil and gas field in the North Sea and operate the Keith field (31.83 per cent share),

a subsea tie-back, which is processed via the Bruce platform facilities.


16 | BHP BILLITON ANNUAL REPORT 2012

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2.2.2 Petroleum Customer Sector Group continued

Algeria

Our Algerian operations comprise our effective 38 per cent interest in the ROD Integrated Development, which consists of six satellite oil fields that pump oil back to a dedicated processing train.

We exited our effective 45 per cent interest in the Ohanet wet gas development in October 2011.

Our interest in ROD is subject to a contractual determination to ensure interest from participating association leases is accurately reflected. Future redetermination of our interest may be possible under certain conditions.


Information on Petroleum operations

Trinidad and Tobago


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

The Greater Angostura project is an integrated oil and gas development located offshore east Trinidad. We operate the field and have a 45 per cent interest in the production sharing contract for the project. Gas sales from the gas export platform commenced in May 2011.

Zamzama

We hold a 38.5 per cent working interest in and operate the Zamzama gas project in Sindh province of Pakistan. Both gas and condensate are sold domestically.

The following table contains additional details of our production operations. This table should be read in conjunction with the production (see section 2.3.1) and reserve tables (see section 2.13.1).


image

Operation

& Location Product Ownership Operator

Title, Leases or Options

Nominal Production Capacity

Facilities, Use & Condition

Australia

image

image

Bass Strait

Offshore Victoria Oil and gas BHP Billiton 50%

Esso Australia (Exxon Mobil subsidiary) 50%

Oil Basins Ltd 2.5% royalty interest in 19 production licences


image

image

North West Shelf

Esso Australia 20 production licences

and 2 retention leases issued by Australian Government

Expire between 2016 and end of life of field One production licence

held with Santos Ltd

Oil: 200 Mbbl/d

Gas: 1,075 MMcf/d

LPG: 5,150 tpd

Ethane: 850 tpd

20 producing fields with 21 offshore developments (14 steel jacket platforms, 3 subsea developments,

2 steel gravity based mono towers, 2 concrete gravity based platforms)

Onshore infrastructure: Longford Facility (3 gas plants, liquid processing facilities)

Interconnecting pipelines Long Island Point LPG and oil storage facilities

Ethane pipeline

Offshore

Western Australia North Rankin, Goodwyn, Perseus,

Echo-Yodel, Angel,

Searipple fields


image

image

North West Shelf

Domestic gas, LPG, condensate, LNG

North West Shelf Project is an unincorporated JV BHP Billiton:

8.33% of original domestic

gas JV, will progressively increase to 16.67%

16.67% of Incremental Pipeline Gas (IPG) domestic gas JV

16.67% of original LNG JV 12.5% of China LNG JV 16.67% of LPG JV

Approximately 15% of current condensate production

Other participants: subsidiaries of Woodside Energy, Chevron, BP, Shell, Mitsubishi/Mitsui and China National Offshore Oil Corporation

Woodside Petroleum Ltd

  1. production licences issued by Australian Government

6 expire in 2022 and

  1. expire 5 years from end of production

    North Rankin A platform:

    2,300 MMcf/d gas

    60 Mbbl/d condensate Goodwyn A platform: 1,450 MMcf/d gas

    110 Mbbl/d condensate

    Angel platform: 960 MMcf/d gas

    50 Mbbl/d condensate Withnell Bay gas plant: 600 MMcf/d gas

    5-train LNG plant: 45,000 tpd LNG

    Production from North Rankin and Perseus processed through North Rankin A platform

    Production from Goodwyn, Searipple and Echo-Yodel processed through Goodwyn A platform

  2. subsea wells in Perseus field tied into Goodwyn A platform

Production from Angel field processed through Angel platform

Onshore gas treatment plant at Withnell Bay processes gas for domestic market

5-train LNG plant

Offshore

Oil BHP Billiton 16.67%

Woodside

3 production licences

Production capacity:

Floating production

Western Australia Wanaea, Cossack, Lambert and

Hermes fields


image

image

Minerva

Woodside Energy 33.34%, Petroleum Ltd BP, Chevron, Japan

Australia LNG (MIMI) 16.67% each

issued by Australian Government. 2 expire

in 2014 and 2018. The third production licence, WA-9-L, expired in 2012 and

was recently renewed for a period of 21 years and will expire in 2033

60 Mbbl/d Storage capacity: 1 MMbbl

storage and off-take unit

Offshore Victoria Gas plant located approximately

4 km inland from

Port Campbell

Gas and condensate BHP Billiton 90%

Santos (BOL) 10%

BHP Billiton Production licence

issued by Australian Government expires 5 years after production ceases

150 TJ/d gas

600 bbl/d condensate

2 well completions

Single flow line transports gas to onshore gas processing facility


image



BHP BILLITON ANNUAL REPORT 2012 | 17

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2 Information on the Company continued



image

Information on Petroleum operations continued

Operation

& Location Product Ownership Operator


Title, Leases or Options


Nominal Production Capacity


Facilities, Use & Condition

Australia continued

image

image

Stybarrow

Offshore

Western Australia Stybarrow and Eskdale fields


image

image

Pyrenees

Offshore

Western Australia Crosby and Stickle Ravensworth fields

Oil and gas BHP Billiton 50% Woodside Energy 50%


Oil WA-42-L permit:

BHP Billiton 71.43%

Apache PVG 28.57% WA-43-L permit: BHP Billiton 40%

Apache Permits 31.5%

Inpex Alpha 28.5%

BHP Billiton Production licence issued

by Australian Government expires 5 years after production ceases


BHP Billiton Production licence issued

by Australian Government expires 5 years after production ceases

Production:

80 Mbbl/d oil

Storage: 900 Mbbl


Production:

96 Mbbl/d oil

Storage: 920 Mbbl

10 subsea well completions (6 producers, 3 water injectors, 1 gas injector)

Gas production is reinjected


18 subsea well

completions (14 producers,

3 water injectors,

1 gas injector), FPSO WA-42-L production commenced third

quarter of FY2010

WA-43-L production commenced first quarter of FY2011

image

US Onshore US

image

Fayetteville – Arkansas

Eagle Ford – South Texas Haynesville –

Northern Louisiana

and East Texas Permian – West Texas

Oil, condensate, gas and NGL

BHP Billiton working interest in leases range from <1% to 100% BHP Billiton average working interest:

Operated wells – 69.5% Non-operated wells – 12.5%

Largest partners include Southwestern Energy, XTO Energy and Chesapeake Energy

BHP Billiton – 1,905 wells Partners –

4,032 wells

We currently own leasehold interests in approximately

    1. million net acres Fayetteville – 487,000 acres

Eagle Ford – 341,000 acres Haynesville – 268,000 acres

Permian – 433,000 acres Other – 76,000 acres Leases associated with

producing wells remain

in place as long as oil and gas is produced in paying quantities

Maximum net daily production (1) achieved during FY2012

1,455 MMcf/d gas 29 Mbbl/d oil and condensate

17 Mbbl/d NGL

Fayetteville – producing gas wells with associated pipeline and compression infrastructure

Eagle Ford – producing oil and gas wells and associated pipeline and compression facilities

Haynesville – producing gas wells with a pipeline network operated by a third party

Permian – oil and gas wells with associated pipelines and compression facilities under construction

All production from Onshore US fields is transported

to various intrastate and interstate pipelines through multiple interconnects


image

Neptune (Green Canyon 613)

Offshore Deepwater Gulf of Mexico (1,300 m)

Oil and gas

BHP Billiton 35%

Marathon Oil 30%

Woodside Energy 20% Maxus US Exploration 15%

BHP Billiton

Lease from US Government as long

as oil and gas produced in paying quantities

50 Mbbl/d oil

50 MMcf/d gas

Permanently moored tension-leg platform (TLP)

Shenzi (Green Canyon 653)

Offshore Deepwater Gulf of Mexico (1,310 m)

Oil and gas

BHP Billiton 44%

Hess Corporation 28%

Repsol 28%

BHP Billiton

Lease from US Government as long

as oil and gas produced in paying quantities

100 Mbbl/d oil

50 MMcf/d gas

Stand-alone TLP Genghis Khan field (part

of same geological structure)

tied back to Marco Polo TLP

Atlantis (Green Canyon 743)

Offshore Deepwater Gulf of Mexico (2,155 m)

Oil and gas

BHP Billiton 44%

BP 56%

BP

Lease from US Government as long

as oil and gas produced in paying quantities

200 Mbbl/d oil

180 MMcf/d gas

Permanently moored

semi-submersible platform

image

Mad Dog (Green Canyon 782)

Offshore Deepwater Gulf of Mexico (1,310 m)

Oil and gas BHP Billiton 23.9% BP 60.5%

Chevron 15.6%

BP Lease from US Government as long

as oil and gas produced in paying quantities

80 Mbbl/d oil

60 MMcf/d gas

Permanently moored integrated truss spar, facilities for simultaneous production and

drilling operations


image

image

Genesis (Green Canyon 205)

Offshore Deepwater Gulf of Mexico (approximately 790 m)

Oil and gas BHP Billiton 4.95% Chevron 56.67%

ExxonMobil 38.38%

Chevron Lease from US Government as long

as oil and gas produced in paying quantities

55 Mbbl/d oil

72 MMcf/d gas

Floating cylindrical hull (spar) moored to

seabed with integrated drilling facilities


image

  1. Capacity varies due to additional wells and pipelines.


18 | BHP BILLITON ANNUAL REPORT 2012

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image

Information on Petroleum operations continued

Operation

& Location Product Ownership Operator


Title, Leases or Options


Nominal Production Capacity



1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

Facilities, Use & Condition

Other

image

image

Liverpool Bay

Offshore northwest Oil and gas BHP Billiton 46.1%

BHP Billiton 3 production licences

308 MMcf/d gas

Integrated development

England, Irish Sea

ENI 53.9%

issued by UK Government 70 Mbbl/d oil

of 5 producing fields

Douglas and Douglas West oil fields, Hamilton, Hamilton North gas fields, Lennox oil and gas field


image

image

Bruce/Keith

expire 2016, 2025

and 2027

and condensate

Oil treated at Douglas complex then piped to oil storage barge for export by tankers

Gas processed at Douglas complex then piped by subsea pipeline to Point of Ayr gas terminal for further processing

Offshore North Sea, UK

Oil and gas Bruce:

BHP Billiton 16%

BP 37%

Total 43.25%

Marubeni 3.75% Keith:

BHP Billiton 31.83%

BP 34.84%

Total 25%

Marubeni 8.33%

Keith – BHP Billiton Bruce – BP

3 production licences issued by UK Government expire 2015, 2018

and 2046

920 MMcf/d gas Integrated oil and gas platform

Keith developed as

tie-back to Bruce facilities


image

image

ROD Integrated Development

Onshore Berkine Basin,

900 km southeast of Algiers, Algeria


image

image

Greater Angostura

Oil BHP Billiton 45% interest in 401a/402a production sharing contract ENI 55%

BHP Billiton effective 38% interest in ROD unitised integrated development ENI 62%

Joint Sonatrach/ENI entity

Production sharing contract with Sonatrach (title holder)

Expires 2016 with option for two 5-year extensions under certain conditions

Approximately 80 Mbbl/d oil

Development and production of 6 oil fields

2 largest fields (ROD and SFNE) extend into neighbouring blocks 403a, 403d

Production through dedicated processing train on block 403

Offshore Trinidad and Tobago


image

image

Zamzama

Onshore

Oil and gas BHP Billiton 45% Total 30%

Chaoyang 25%


Gas and condensate BHP Billiton 38.5%

BHP Billiton Production sharing

contract with Trinidad and Tobago Government entitles us to operate Greater Angostura

until 2021


BHP Billiton 20-year development

100 Mbbl/d oil

280 MMcf/d gas


500 MMcf/d gas

Integrated oil and gas development: central processing platform connected to the Kairi-2 platform and gas export platform with 3 satellite wellhead protector platforms and flow lines

Oil pipeline from processing platform to storage and export at Guayaguayare

Gas supplied to Trinidad and Tobago domestic markets


8 production wells

Sindh Province, Pakistan

ENI Pakistan 17.75%

PKP Exploration 9.375%

PKP Exploration 2 9.375%

Government Holdings 25%

and production lease from Pakistan Government expires

2022 (option to extend 5 years)

3,350 bbl/d condensate 4 process trains

2 front end compression trains


image


Development projects

Australia

North West Shelf North Rankin gas compression project

The North West Shelf gas compression project was approved by the Board in March 2008 to recover remaining lower pressure gas from the North Rankin and Perseus gas fields. The project consists of a new gas compression platform, North Rankin B, capable of processing 2,500 million cubic feet per day (MMcf/d) of gas, which

will be constructed adjacent to the existing North Rankin A platform, 135 kilometres offshore from Karratha on the northwest coast

of Western Australia. The two platforms will be connected by

a 100 metre long bridge and operate as a single facility. We own a 16.67 per cent share in the project and our development costs are approximately US$850 million, of which US$561 million was incurred as of 30 June 2012. First gas production is expected in

CY2013. This project is operated by Woodside with an equally shared interest between Woodside BHP Billiton, BP, Chevron, MIMI and Shell.

Bass Strait Kipper gas field development

Initial development of the Kipper gas field in the Gippsland Basin located offshore Victoria was approved by the Board in December 2007. A supplemental approval of the development was granted in January 2011. The first phase of the project includes two new subsea wells, three new pipelines and platform modifications to supply

10 thousand barrels of condensate per day (Mbbl/d) and 80 MMcf/d of gas. Gas and liquids will be processed via the existing Gippsland Basin joint venture facilities. Our share of development costs

is approximately US$900 million, of which US$832 million was incurred as of 30 June 2012. Facilities are expected to be ready in CY2012 with first production pending resolution of mercury content. Additional treatment facilities will be required onshore due to mercury containment within the gas. The mercury issue will be undertaken as a separate project. The Kipper gas field development is comprised of the Kipper Unit Joint Venture and

the Gippsland Basin Joint Venture. We own a 32.5 per cent interest


BHP BILLITON ANNUAL REPORT 2012 | 19

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2 Information on the Company continued



2.2.2 Petroleum Customer Sector Group continued

in the Kipper Unit Joint Venture, with Esso Australia and Santos owning the remaining 67.5 per cent. We own a 50 per cent interest in the Gippsland Basin Joint Venture with Esso Australia owning the remaining 50 per cent.

Bass Strait Turrum field development

Further expansion of the Gippsland Basin facilities is underway following approval by the Board in July 2008 of the full field development of the Turrum oil and gas field. A supplemental approval of the development was obtained in January 2011.

The project consists of a new platform, Marlin B, linked by a bridge to the existing Marlin A platform. The Turrum field,

which has a capacity of 11 Mbbl/d of oil and 200 MMcf/d of gas, is located 42 kilometres from shore in approximately 60 metres of water. Our share of development costs is approximately US$1.4 billion, of which US$941 million was incurred as

of 30 June 2012. Initial production is targeted for CY2013. The Turrum field development operates under the Gippsland Basin Joint Venture in which we own a 50 per cent interest with Esso Australia owning the remaining 50 per cent.

Macedon

Macedon is a domestic gas development in Western Australia. The project will consist of a 200 MMcf/d stand alone gas plant, four subsea production wells, a 90 kilometre, 20 inch wet

gas pipeline and a 67 kilometre, 2 inch sales gas pipeline.

In August 2010, the project was approved at an investment level of US$1.1 billion (BHP Billiton share) of which US$770 million

was incurred as of 30 June 2012. Execution phase work is on track with first gas production expected in CY2013. We are the operator with a 71.43 per cent interest and Apache PVG Pty Ltd holds the remaining 28.57 per cent interest.

United States

Onshore US

BHP Billiton’s Onshore US capital program in FY2012 was US$3.3 billion, primarily related to drilling and completion activities at the Fayetteville, Haynesville and Eagle Ford fields and the installation of approximately 500 kilometres of pipeline

infrastructure and additional gas processing facilities. In FY2012, 190 wells were completed in Onshore US. Drilling in the Permian Basin was primarily exploration and appraisal in FY2012.

Due to the low US natural gas price in FY2012, the majority

of drilling and completion activity in Onshore US was directed towards the liquids-rich Eagle Ford and Permian fields. At the end of FY2012, over 80 per cent of drilling activity was focused on these areas and Onshore US liquids production had risen to more than 40 thousand barrels per day.

BHP Billiton’s Onshore US capital expenditure in FY2013 is expected to rise to US$4.0 billion and the program will include drilling and completion, gas processing facilities and pipeline infrastructure.

The majority of the activity will focus on the liquids-rich Eagle Ford and Permian fields. Development of these liquids-rich fields complements our traditional project pipeline. Development plans will remain flexible and aligned with the external environment.

Exploration and appraisal

We focus on capturing and operating large acreage positions primarily in areas that are in proven hydrocarbon basins. We have exploration interests around the world, particularly in the Gulf

of Mexico, Australia and the South China Sea. During FY2012, our gross expenditure on exploration was US$1.4 billion,

of which US$674 million was expensed. Our major exploration interests are as follows:

Australia

We have a 55 per cent interest in WA-351-P and in March 2012

we drilled the Tallaganda-1 exploration well. The well encountered hydrocarbons. The well has been plugged and abandoned and

is being evaluated to determine development potential.


The North Scarborough-1 well was spud in January 2012 in permit WA-346-P. The well encountered hydrocarbons. The well was plugged and abandoned and is being evaluated to determine development potential. We own a 100 per cent working interest in the permit.

The Argus-2 appraisal well was spud in June 2011 in the AC/RL8 retention lease over the Argus gas field. The well failed to reach the primary objective and was temporarily plugged and abandoned in September 2011. Woodside Browse Pty Ltd operates the AC/RL8 retention lease with a 60 per cent interest while we hold the remaining 40 per cent.

We have a 16.67 per cent interest in the North West Shelf Project with Woodside as Operator. In August 2011, the Seraph-1 well was drilled. It has been plugged and abandoned and expensed as a dry hole. In November 2011, the Tidepole East-1 well

was drilled and hydrocarbons were encountered. It has been plugged and abandoned and is being evaluated to determine development potential.

In July 2012, we acquired an additional 6.5 per cent interest in block WA-335-P offshore Western Australia from Apache, taking our total participating interest to 52.5 per cent. We have exercised our right to assume operatorship from Apache (28.6 per cent). Kufpec holds the remaining 18.9 per cent.

In June 2012, we farmed into block WA-389-P in the Northern Carnarvon basin. We acquired a 40 per cent interest, while Woodside (Operator) owns 25 per cent and Cue Energy Resources owns 35 per cent. The Banambu Deep-1 exploration well was spud in May 2012. The well was plugged and abandoned and expensed as a dry hole.

In May 2012, we were awarded three exploration permits following our bids in the October 2011 Gazettal round WA-469-P, WA-470-P, and WA-475-P offshore Western Australia. The minimum exploration program for blocks WA-469-P and WA-470-P includes the acquisition and processing of 3D seismic data. The minimum exploration program for block WA-475-P includes the acquisition and processing of 3D seismic data and the drilling of two exploration wells.

United States

Onshore US

BHP Billiton’s Onshore US exploration and appraisal program

in FY2012 was US$392 million, primarily focused on the Permian Basin and included land acquisitions and the drilling and completion of seven exploration wells. Initial results from the Permian Basin exploration and appraisal program were positive, with four of the seven exploration wells proving to be productive.

Deep Blue – Green Canyon 723

We owned a 31.9 per cent interest in the Deep Blue prospect located in the Green Canyon area. Partners in the well were Noble

(33.8 per cent), Statoil (15.6 per cent), Samson (9.3 per cent) and Murphy (9.3 per cent). The Deep Blue exploration well-1 was drilled in November 2009 and concluded in May 2010. The well’s original hole was drilled to a total depth of 9,962 metres and encountered hydrocarbons. Sidetrack drilling started in May and was suspended in June 2010 due to the Gulf of Mexico drilling moratorium issued by the US Government. The moratorium was lifted in October 2010 and the sidetrack well recommenced drilling in August 2011.

The sidetrack encountered a non-commercial quantity of hydrocarbons and as a result the well was plugged and abandoned and the

block relinquished.

Gunflint – Mississippi Canyon 948

In June 2011, we entered into a Participation Agreement with the Gunflint partnership by consolidating our block (MC 992) with four other blocks in the area. The agreement provided us with an 11.2 per cent interest in the Gunflint prospect with Noble serving as the operator. Our partners include Noble (26.05 per cent), BP (31.50 per cent), Samson (16 per cent) and Marathon (15.25 per cent). The Mississippi Canyon 948

appraisal well was spud in December 2011. The well was plugged and abandoned and the well results are being evaluated.


20 | BHP BILLITON ANNUAL REPORT 2012

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2.2.2 Petroleum Customer Sector Group continued

Ness Deep – Green Canyon 507

In May 2012, we entered into the Ness Deep prospect by consolidating the interest in our block (Green Canyon 463) with the interest in

our partner’s block (Green Canyon 507). We acquired operatorship of the prospect with a 50 per cent interest. The remaining 50 per cent interest is held by our partner Hess. The Green Canyon 507 Ness Deep exploration well spud in June 2012, and is in progress.

Knotty Head

The Knotty Head project is currently in the earliest phase of project development. The development assumptions for this project consist of a joint wet tree TLP development, production and water injection wells. The operator is Nexen and we hold a 25 per cent interest.

Atlantis East – Green Canyon 700

The Atlantis East appraisal well was spud in April 2012 and is currently drilling. BP operates the well with a 56 per cent interest, while we hold the remaining 44 per cent. Once the appraisal well has been drilled, a reasonable assessment of commercial hydrocarbon potential will be performed.

Mad Dog North – Green Canyon 738

The Mad Dog North appraisal well (GC 738) was spud in June 2011. The appraisal program was operated by BHP Billiton using the Transocean Development Driller 1 rig in 1,362 metres of water.

Partners in the well are BP (60.5 per cent) and Chevron (15.6 per cent).

BHP Billiton’s interest is 23.9 per cent. The primary objective

of the program was to evaluate fully the structure on the northern flank of Mad Dog field. The Mad Dog North appraisal well penetrations confirm the existence of economically recoverable resources.

Additional work is ongoing to better define the recoverable volumes and development options.

Other

Colombia

In September 2008, we entered into a technical evaluation

of hydrocarbon potential in Block 5 in the Llanos basin onshore Colombia. We operate the project and hold a 71.4 per cent working interest in the joint venture, with SK Energy Co holding the remaining

28.6 per cent interest. The minimum work program includes

the acquisition of 1,000 kilometres of 2D seismic plus the drilling of five stratigraphic wells. The airborne survey was completed

in January 2010, and 621 kilometres of 2D seismic were acquired from December 2010 to May 2011. In addition, four stratigraphic wells were drilled. Technical analysis and discussions with commercial partners and the Colombian Government continue.

India

In December 2008, we signed production sharing contracts covering seven blocks located offshore India. We hold a 26 per cent interest in the blocks. Our partner, GVK, holds the remaining 74 per cent interest in the blocks. The minimum exploration program includes the acquisition and processing of 2D seismic data across the seven blocks and a small 3D seismic acquisition in one block. We have

a partner option to increase our interest to 50 per cent prior

to drilling the first well or within six months of completing final seismic data interpretation.

In June 2010, we signed production sharing contracts covering an additional three blocks located offshore India. We hold a 100 per cent interest in the blocks. The minimum work program associated with the three blocks includes the acquisition and processing of 2D and 3D seismic data.

We are the operator of all 10 blocks and have met the commitment for acquiring the 2D seismic in all blocks. 2D seismic processing

is nearly complete, and we are currently interpreting the processed seismic data. The 3D seismic acquisition, processing and interpretation, which will complete the committed exploration work program, will be planned once the 2D seismic data interpretation is completed.

Our offshore India blocks are impacted by an access issue related to delays in receiving permits from the Ministry of Defence for the Government of India to conduct necessary exploration activities. BHP Billiton and GVK have claimed force majeure as a result of these delays. Discussions aimed at resolving the access issue are ongoing with the Government of India.

Malaysia


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

In March 2007, we were awarded offshore Blocks N and Q in Malaysia with a 60 per cent interest and operatorship. Petronas Carigali holds the remaining 40 per cent. The minimum exploration program includes the acquisition and processing of seismic data across the two blocks and the drilling of four Block N exploration wells within the first seven years. The initial seismic acquisition program commenced in June 2008 and was completed in September 2008 for both blocks. Additional seismic acquisition and processing for Block Q is planned for completion by March 2013. The first exploration well was drilled in February 2010 and was plugged, abandoned and expensed as a dry hole. Drilling of the second exploration well was completed in February 2012 and was plugged, abandoned and expensed as a dry hole.

Philippines

In November 2009, we acquired a 75 per cent interest in Service Contract 59, located offshore Philippines and we assumed operatorship in April 2010. PNOC Exploration Corp

owns the remaining 25 per cent interest. As part of the minimum work program, the joint venture completed the acquisition and processing of a 2D seismic survey in April 2010. A 3D seismic acquisition program was completed in January 2011. In addition a 2D seismic acquisition was completed in December 2011 with processing currently ongoing. The remaining obligations on the current work program require us to drill one exploration well prior to January 2014.

In May 2011, we exercised an option to farm-in to the fourth sub phase Service Contract 55, located offshore Philippines

to acquire a 60 per cent working interest. In January 2012, the Philippines Department of Energy approved our farm-in and granted us operatorship of the block. The remaining interest is divided between Otto Energy, at 33.18 per cent interest, and Trans-Asia,

at 6.82 per cent interest. For the current sub phase, a 3D seismic acquisition has been completed in 2011, and we have a one well commitment that is required to be drilled by August 2013.

In August 2009, we exercised our option with partner Mitra Energy (25 per cent) to acquire a 25 per cent non-operating interest in Service Contract 56 located offshore Philippines. ExxonMobil was operator and held the remaining 50 per cent interest in the block. The joint venture completed drilling the first exploration well in December 2009, and the second exploration well in February 2010. Both wells were expensed as dry holes. The drilling of these wells fulfilled our minimum work commitment against the service contract. We exited the block in November 2011 and reassigned our working interest back to Mitra Energy.

Vietnam

In October 2009, we became operator of Vietnam Blocks 28 and 29/03 located approximately 200 kilometres offshore southern Vietnam. We had a 50 per cent interest in each of the blocks, with Mitra Energy holding the remaining 50 per cent. The minimum work program for the first sub-phase included 2D seismic data and two wells. We also acquired and processed 3D data. The first exploration well was drilled in May 2011 while drilling of the second well commenced in June 2011. Both wells were plugged, abandoned and expensed as dry holes in FY2011. We have exited these two Vietnam blocks and transferred operatorship to Mitra Energy in July 2012.

Brunei

In September 2010, we entered into a Deed of Amendment with respect to Block CA1 (formerly Block J) following the settlement of the maritime dispute between Brunei and Malaysia. We own a 22.5 per cent interest in the block, with the residual interests held by Total Deep Offshore Borneo (54 per cent and operator),

Hess (Borneo Block CA1) Ltd (13.5 per cent), Petronas Carigali

(five per cent) and Canam Brunei Oil Ltd (Murphy Oil) (five per cent). The minimum work obligation includes the drilling of seven exploration wells. Julong Center began drilling in September 2011 and was plugged, abandoned and expensed as a dry hole. Julong East began drilling in January 2012 and encountered hydrocarbons. Jagus East began drilling in April 2012 and encountered hydrocarbons. Both wells have been plugged and abandoned and the well results are being evaluated to determine development potential.


BHP BILLITON ANNUAL REPORT 2012 | 21

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2 Information on the Company continued



      1. Petroleum Customer Sector Group continued

        South Africa

        In September 2010, we entered into exploration agreements for

        two blocks offshore South Africa. We own and operate a 60 per cent interest in Block 3A/4A, and a 90 per cent interest in block 3B/4B. The remaining interest in Block 3A/4A is held by PetroSA (30 per cent) and Sasol Petroleum International (10 per cent). Global Offshore Oil Exploration South Africa holds a 10 per cent interest in Block 3B/4B. The minimum work program includes the drilling of one exploration well within each block.

        Trinidad and Tobago

        We have a 45 per cent interest in the Greater Angostura Joint Venture with our partners Total (30 per cent interest) and Chaoyang (25 per cent interest). In July 2011, the Canteen North 1 well was drilled within the producing Block 2c area. The well encountered hydrocarbons and was plugged and abandoned. The fault block

        is being evaluated to determine development potential.

        Drilling

        The number of wells in the process of being drilled (including temporarily suspended wells and excluding wells drilled and completed in FY2012) as of 30 June 2012 was as follows:

        image

        Exploratory wells Development Wells Total


        Gross

        Net (1)

        Gross

        Net (1)

        Gross

        Net (1)

        Australia

        United States

        4

        2

        305

        136

        309

        138

        Other

        1

        1

        1

        1

        Total

        4

        2

        306

        137

        310

        139

        (1) Represents our share of the gross well count.

        Other significant activities

        Australia

        Browse

        The Browse LNG Development comprises development of the Torosa, Brecknock and Calliance gas fields, which were

        discovered in 1971, 1979, and 2000, respectively. The fields are located approximately 440 kilometres north-northwest of Broome,

        Western Australia in water depths up to 800 metres. Evaluation of the in-place resources continues together with definition of the on and offshore facilities required to extract hydrocarbons and produce and export LNG.

        Woodside is the operator and we own 8.33 per cent of the East Browse resources and 20 per cent of West Browse.

        Longford

        The Longford Gas Conditioning Plant (LGCP) Project will enable the production of Turrum reserves plus the production of Kipper and other undeveloped high-carbon dioxide content resources. The project scope includes a carbon dioxide extraction facility, brownfield tie-ins, an electrical upgrade and multiple supporting utilities. Esso is the operator of LGCP, owning a 50 per cent interest and BHP Billiton owns the remaining 50 per cent.

        Scarborough

        Development planning for the large Scarborough gas field offshore Western Australia is in progress. We continue to evaluate development options for a LNG plant and offshore production facilities. Esso is the operator of the WA-1-R lease and we hold

        a 50 per cent working interest. We are the operator and have a 100 per cent working interest in the WA-346-P block.

        Greater Western Flank–A

        The Greater Western Flank–A (GWF–A) gas project was approved by the Board in November 2011 to recover gas from the near field Goodwyn H and Tidepole fields. The project consists of a five well

        subsea tie-back of the Goodwyn H and Tidepole fields to the Goodwyn A platform. The Goodwyn A platform is located in 130 metres of water, approximately 130 kilometres offshore from Karratha on the northwest coast of Australia. The development is estimated to have the potential to provide gross sales of 30 MMboe (BHP Billiton share), including condensate and liquefied gas. Woodside is the operator

        and we own a 16.67 per cent share.


        NWS Other – (Persephone/Greater Western Flank ‘2’)

        Planning is underway for the development of the Persephone field and Greater Western Flank ‘2’. The Persephone field is located near existing NWS infrastructure, approximately eight kilometres northeast of the North Rankin A platform. Greater Western Flank ‘2’ represents the second phase of development of the core Greater Western

        Flank fields, behind the GWF-A development, which are located to the southwest of the existing Goodwyn A platform. Woodside is the operator and we own a 16.67 per cent share of both Persephone and Greater Western Flank ‘2’.

        United States

        Shenzi Water Injection

        The Shenzi Water Injection program includes drilling and completion of five water injection wells and provides facilities to inject up

        to 125 Mbbl/d of water at 7,000 pounds per square inch (psi). The program was approved as part of the original sanctioned Shenzi project which began production in 2009 to supplement aquifer pressure for additional recovery. To date, Water Injector

        (WI) #1 has been drilled and completed and WI #2 has been drilled. Planning for the completion of WI #2 and drilling of WI #3 is underway.

        Atlantis South Water Injection

        The Atlantis South Water Injection project is in the execution phase and involves drilling four subsea water injectors, tying them into the existing infrastructure and commissioning the 75 Mbbl/d

        of water injection facilities. This water injection project mitigates natural production decline due to low aquifer pressure. BP is the operator and we hold a 44 per cent working interest.

        Mad Dog Phase 2

        In April 2012, we announced approval for US$708 million

        (BHP Billiton share) in pre-commitment funding for the Mad Dog Phase 2 project. The Mad Dog Phase 2 project is in response to the successful Mad Dog South appraisal well, which confirmed significant hydrocarbons in the southern portion of the Mad Dog field. Mad Dog Phase 2 will be a spar development with all subsea production and injection wells and includes water injection capability to provide support to the east, west and south of the field.

        Delivery commitments

        We have delivery commitments of natural gas and LNG of approximately 3,286 billion cubic feet through 2031 (72 per cent Australia and 28 per cent Other) and crude, condensate and NGL commitments of 532.7 million barrels through 2023 (94 per cent United States, five per cent Australia and one per cent Other).

        We have sufficient proved reserves and production capacity to fulfil these delivery commitments. Further information can be found in section 2.13.1.

      2. Aluminium Customer Sector Group

Our Aluminium CSG is a portfolio of assets at three stages of the aluminium value chain: mining bauxite, refining bauxite into alumina, and smelting alumina into aluminium metal. We are the world’s eighth-largest producer of aluminium, with total production in FY2012 of 1.2 million tonnes (Mt) of aluminium. We also produced

12.8 Mt of bauxite and 4.2 Mt of alumina.

During FY2012, we consumed 34 per cent of our alumina production in our aluminium smelters and sold the balance to other smelters.

Our alumina sales are a mixture of long-term contract sales at LME-linked prices and spot sales at negotiated prices. Prices for our aluminium sales are generally linked to prevailing LME prices.

Boddington/Worsley

Boddington/Worsley is an integrated bauxite mining/alumina refining operation. The Boddington bauxite mine in Western Australia supplies bauxite ore to the Worsley alumina refinery via a 62-kilometre long conveying system. We own 86 per cent of the

mine and the refinery. It is our sole integrated bauxite mining/alumina refining asset. Worsley, one of the largest and lowest-cost refineries in the world, is currently in the ramp-up phase of a major expansion (see Development projects below). Our share of Worsley’s FY2012 production was 2.9 Mt of alumina. Worsley’s export customers include our own Hillside, Bayside and Mozal smelters in southern Africa. Boddington has a reserve life of 18 years.


22 | BHP BILLITON ANNUAL REPORT 2012

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2.2.3 Aluminium Customer Sector Group continued

Mineração Rio do Norte

We own 14.8 per cent of Mineração Rio do Norte (MRN), which owns and operates a large bauxite mine in Brazil.

Alumar

Alumar is an integrated alumina refinery/aluminium smelter.

We own 36 per cent of the Alumar refinery and 40 per cent of the smelter. Alcoa operates both facilities. The operations, and their integrated port facility, are located at São Luís in the Maranhão province of Brazil. Alumar sources bauxite from MRN. During FY2012, approximately 27 per cent of Alumar’s alumina production was used to feed the smelter, while the remainder was exported. Our share of Alumar’s FY2012 saleable production was 1,235 kilotonnes (kt) of alumina and 170 kt of aluminium.

Hillside and Bayside

Our Hillside and Bayside smelters are located at Richards Bay, South Africa. Hillside’s capacity of approximately 715 kilotonnes


Information on Aluminium mining operations

per annum (ktpa) makes it the largest aluminium smelter in the southern hemisphere. Following the mothballing of the potlines B and C in support of a national energy conservation scheme, Bayside has reduced smelting capacity to approximately 95 ktpa since 2009. Hillside imports alumina from our Worsley refinery. Both Hillside and Bayside source power from Eskom, the South African state utility, under long-term contracts with prices linked to the LME price of aluminium (except for Hillside Potline 3,


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

the price of which is linked to the South African and US producer price indices). Potline capacity was impacted as a result of major unplanned outage in the March 2012 quarter.

Mozal

We own 47.1 per cent of and operate the Mozal aluminium smelter in Mozambique, which has a total capacity of approximately

563 ktpa. Mozal sources power generated by Hydro Cahora Basa via Motraco, a transmission joint venture between Eskom and the national electricity utilities of Mozambique and Swaziland. Our share of Mozal’s FY2012 production was 264 kt.


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities,

Location

of Access

Ownership

Operator or Options

History

Style

Power Source Use & Condition

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).


image

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Bauxite Boddington bauxite mine

Boddington, 123 km southeast of Perth, Western Australia

Public road

Ore transported to Worsley alumina refinery by a 62 km conveyor

BHP Billiton 86% Sojitz Alumina 4%

Japan Alumina

Associates 10% Ownership structure of

operator as per

Worsley JV

BHP Billiton Worsley Alumina Pty Ltd

Mining leases from Western Australia Government expire over the period 2014–2032, all

with 21-year renewal available

2 sub-leases from Alcoa of Australia

Opened 1983 Significantly extended 2000

Open-cut Surficial gibbsite-rich

lateritic

weathering of Darling Range rocks

JV owned powerline connected to Worsley alumina refinery site

Crushing plant Nominal capacity: 19 mtpa bauxite


image

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Mineração Rio do Norte

Porto Trombetas, Pará, Brazil

Sealed road and rail connects mine area with Porto Trombetas village, accessed by air or river

BHP Billiton 14.8%

Alcoa and affiliates 18.2%

Vale 40% Rio Tinto Alcan 12%

Votorantim 10%

Hydro 5%

MRN Mining rights granted by Brazilian Government until reserves exhausted

Production commenced 1979

Expanded 2003

Open-cut Lateritic weathering

of nepheline

syenite occurring primarily as gibbsite in a clay matrix overlain by clay sediments

On-site fuel oil generators

Crushing facilities, long distance conveyors,

wash plant Nominal capacity: 18 mtpa washed

bauxite

Village and airport Drying and ship loading facilities

near Porto

Trombetas


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Smelter, Refinery



Title, Leases


Nominal Production


or Processing Plant Location

Ownership

Operator

or Options

Product

Capacity

Power Source

Information on Aluminium smelters and refineries


image

image

Aluminium and alumina Hillside

Aluminium smelter Richards Bay,

200 km north of Durban, KwaZulu-Natal province, South Africa


image

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Bayside

Aluminium smelter Richards Bay,

200 km north of Durban, South Africa

100% BHP Billiton Freehold title to property,

plant, equipment Leases over harbour facilities


100% BHP Billiton Freehold title to property,

plant, equipment

Standard aluminium ingots


Primary aluminium, slab products

715 ktpa primary aluminium


95 ktpa primary aluminium on remaining Potline A

Eskom (national power supplier) under long-term contracts

Contract prices for Hillside 1 and 2 linked to LME aluminium price Prices for Hillside 3 linked to SA and US producer price index


Eskom, under

long-term contract Contract price linked

to LME aluminium price


image



BHP BILLITON ANNUAL REPORT 2012 | 23

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2 Information on the Company continued



image

Information on Aluminium smelters and refineries continued


Smelter, Refinery

or Processing Plant Location Ownership Operator


Title, Leases

or Options Product


Nominal Production

Capacity Power Source

Aluminium and alumina continued

image

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Mozal

Aluminium smelter 17 km from

Maputo, Mozambique


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Worsley

BHP Billiton 47.1%

Mitsubishi 25% Industrial Development Corporation

of South Africa Ltd 24% Mozambique Government 3.9%

BHP Billiton 50-year

government concession

to use the land Renewable

for 50 years

Standard aluminium ingots

563 ktpa Motraco

Alumina refinery 55 km northeast of Bunbury, Western Australia


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Alumar

BHP Billiton 86%

Sojitz Alumina 4% Japan Alumina Associates 10%

Ownership structure of operator as

per Worsley JV

BHP Billiton Worsley Alumina Pty Ltd

2,480 ha refinery lease from Western Australian Government Expires 2025

21-year renewal available

Metallurgical grade alumina

4.6 mtpa JV owned on-site coal power station, third party on-site

gas-fired steam power generation plant

Alumina refinery and aluminium smelter

São Luis, Maranhão, Brazil

Aluminium smelter: BHP Billiton 40%

Alcoa 60% Alumina refinery: BHP Billiton 36%

Alcoa & affiliates 54%

Rio Tinto 10%

Alcoa operates both facilities

All assets held freehold

Alumina and aluminium ingots

Refinery:

3.5 mtpa alumina Smelter:

450 ktpa primary

aluminium

Electronorte (Brazilian public power generation concessionaire),

20-year contract


image


Development projects

Worsley Efficiency and Growth project

In May 2008, we announced the Board’s approval of an expansion project to increase the capacity of the Worsley refinery from 3.5 million tonnes per annum (mtpa) of alumina to 4.6 mtpa (100 per cent capacity) through expanded mining operations

at Boddington, additional refinery capacity and upgraded port facilities. A supplementary approval of the development was obtained in June 2011. The expansion project, with a budgeted capital expenditure of US$3.0 billion, achieved first production

in March 2012 and full production is on track to be achieved within the original ramp-up schedule of 12–16 months from March 2012. The operations are well placed to achieve a smooth ramp-up due to the extensive commissioning and operating planning that has been put in place. Worsley is already one of the most efficient and productive alumina refineries in the world and its unit cash costs are expected to benefit from the increased scale of production.

Guinea Alumina

We have a one-third interest in a joint venture that has undertaken a feasibility study into the construction of a 10 mtpa bauxite mine, an alumina refinery with processing capacity exceeding 3.3 mtpa and associated infrastructure approximately 110 kilometres from the port of Kamsar in Guinea. We are seeking to exit the project.

2.2.4 Base Metals Customer Sector Group

Our Base Metals CSG is one of the world’s premier producers of copper, silver, lead and uranium, and a leading producer of zinc. Our portfolio of large, low-cost mining operations includes the Escondida mine in Chile, the world’s largest single producer

of copper, and Olympic Dam in South Australia, already

a major producer of copper and uranium with the potential for expansion.

Our total copper production in FY2012 was 1.1 Mt. In addition to conventional mine development, we continue to pursue advanced treatment technologies, such as leaching low-grade chalcopyrite ores, which we believe have the potential to recover copper from ores previously uneconomic to treat.

We market five primary products: copper concentrates, copper cathodes, uranium oxide, lead concentrates and zinc concentrates.

We sell most of our copper, lead and zinc concentrates to smelters under long-term volume contracts at prices based on the LME price for the contained metal, typically set three or four months after shipment, less treatment charges and refining charges (collectively referred to as ‘TCRCs’) that are negotiated with the smelters mostly on an annual or bi-annual basis. Some of the ores we mine contain quantities of silver and gold, which remain in

the base metal concentrates we sell. We receive payment credits for the silver and gold recovered by our customers in the smelting and refining process.

We sell most of our copper cathode production to wire rod mills, brass mills and casting plants around the world under annual contracts with prices at premiums to LME prices. We sell uranium oxide to electricity generating utilities, principally in Western Europe, North America and North Asia. Uranium is typically sold under a mix of longer-term and shorter-term contracts. A significant portion of our uranium production is sold into fixed price contracts, although increasingly sales are based on flexible pricing terms.

We have six assets, with Pampa Norte having two operations.

Escondida

Our 57.5 per cent owned and operated Escondida mine is the largest producer in the world. In FY2012, our share of Escondida production was 333.8 kt of payable copper in concentrate and

172.0 kt of copper cathode.

Escondida has a reserve life of 54 years. The increase in reserves from 35 years in FY2011 is predominantly due to OGP1 approval that will deliver double the current flotation capacity that allows improved recovery of lower grade ores with commensurate expansion of the reserves footprint.

The availability of key inputs like power and water at competitive prices is an important focus at Escondida. Escondida’s power demand of approximately 440 MW is currently covered by four contracts: one of which provides 340 MW until 2029; and the balance of which provide 252 MW until 2016.

To address limitations on the availability of water, we desalinate and carefully manage our use and re-use of available water.

We are exploring alternative sources, including further desalination of seawater.


24 | BHP BILLITON ANNUAL REPORT 2012

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2.2.4 Base Metals Customer Sector Group continued

Olympic Dam

Olympic Dam is already a significant producer of copper cathode and uranium oxide and a refiner of smaller amounts of gold and silver bullion. We are exploring a series of staged development options that would make our wholly owned Olympic Dam operation one of the world’s largest producers of copper, the largest producer of uranium and a significant producer of gold (see Development projects below).

Production in FY2012 was lower than that achieved in FY2011. Olympic Dam produced 192.6 kt (FY2011 – 194.1 kt) of copper cathode, 3.9 kt (FY2011 – 4.0 kt) of uranium oxide, 117.8 kilo-ounces (FY2011 – 111.4 kilo-ounces) of refined gold and 907 kilo-ounces (FY2011 – 982 kilo-ounces) of refined silver in FY2012.

Olympic Dam has a reserve life of 57 years.

Antamina

We own 33.75 per cent of Antamina, a large, low-cost, long-life copper/zinc mine in Peru. Antamina has a reserve life of 16 years. Our share of Antamina’s FY2012 production was 127.0 kt of copper in concentrate, and 57.5 kt of zinc in concentrate. Antamina also produces smaller amounts of molybdenum and lead/bismuth concentrate.

Pampa Norte Spence Operation

Our wholly owned Spence copper mine produces copper cathode. During FY2012, we produced 180.3 kt of copper cathode.

Spence has a reserve life of 11 years.


Information on Base Metals mining operations

Pampa Norte Cerro Colorado Operation


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

Our wholly owned Cerro Colorado mine in Chile remains a significant producer of copper cathode, although production levels have declined in recent years as grades have declined. Production in FY2012 was

83.4 kt of copper cathode.

Cerro Colorado has a reserve life of 10 years.

Cannington

Our wholly owned Cannington mine in northwest Queensland, Australia, is one of the world’s largest producers of silver.

In FY2012, Cannington produced concentrates containing

239.1 kt of lead, 54.7 kt of zinc and approximately 34.2 million ounces of silver.

Cannington has a reserve life of eight years.

North America – Pinto Valley

As a result of favourable economic conditions in FY2012, in particular copper prices, the decision was made to resume sulphide mining and milling operations at the Pinto Valley mine located in Arizona, United States. The mine, which will produce copper and molybdenum concentrate, is expected to have annual production capacity

of approximately 60 kt of copper in concentrate. The project is expected to resume mining at the end of CY2012 (FY2013).

Copper cathode will also continue to be produced at Pinto Valley and the neighbouring Miami Unit from residual solvent extraction electrowinning (SXEW) operations.

Pinto Valley has a reserve life of four years.


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).


image

image

Copper Escondida

Atacama Desert, 170 km southeast of

Public road Copper cathode transported by

BHP Billiton 57.5% of Minera Escondida

BHP Billiton Mining concession

from Chilean Government

Original construction completed 1990

2 open-cut pits: Escondida and Escondida Norte

Escondida owned transmission

2 concentrator plants extract copper concentrate

Antofagasta,

Chile

privately owned

rail to ports

Limitada (MEL)

Rio Tinto 30%

valid indefinitely

(subject to payment

Subsequent

expansion

Escondida and

Escondida Norte

lines connect to from sulphide ore

Chile’s northern by flotation

at Antofagasta and Mejillones Copper

concentrate

transported by

JECO Corporation consortium comprising Mitsubishi, Nippon Mining

of annual fees)

projects cost US$3.0 billion (100%)

Sulphide Leach copper

mineral deposits are adjacent but distinct supergene enriched porphyry copper deposits

power grid Electricity purchased

under contract

extraction process 2 solvent extraction plants produce

copper cathode

Nominal capacity:

Escondida-owned and Metals 10%

project cost

3.2 mtpa copper


Spence

Atacama

pipeline to its Coloso port facilities


image

image

Public road

Jeco 2 Ltd 2.5%


100% BHP Billiton Mining concession

US$1.0 billion (100%)

First production 2006


Development


Open-cut


Group-owned

concentrate

330 ktpa copper cathode


Processing and

Desert,

Copper cathode

from Chilean

cost of

Supergene enriched transmission

crushing facilities,

150 km northeast of

transported by rail to ports at

Government valid indefinitely

US$1.1 billion approved 2004

porphyry copper deposit that

lines connect to separate dynamic Chile’s northern (on-off) leach

Antofagasta,

Chile

Mejillones and Antofagasta

(subject to payment

of annual fees)

First copper produced 2006

includes copper power grid oxide ores overlying Electricity a sulphide zone purchased

under contract

pads, solvent

extraction plant, electrowinning plant Nominal capacity:

200 ktpa


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BHP BILLITON ANNUAL REPORT 2012 | 25

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2 Information on the Company continued



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Information on Base Metals mining operations continued


Mine Type &

Mine & Location

Means

of Access Ownership Operator

Title, Leases

or Options History

Mineralisation

Style Power Source

Facilities, Use & Condition

Copper continued

image

image

Cerro Colorado

Atacama

Public road

100% BHP Billiton Mining concession

Commercial

Open-cut

Long-term

2 primary, secondary

Desert,

Copper cathode

from Chilean

production

Supergene enriched contracts with

and tertiary

120 km east

trucked to port

Government valid

commenced 1994 and oxidised

northern Chile

crushers, leaching

of Iquique, Chile


image

image

Pinto Valley

125 km east of Phoenix, Arizona, US

at Iquique


Public road As a result of

the resumption

of the sulphide operations, copper and molybdenum concentrate

to be trucked

indefinitely (subject to payment

of annual fees)


100% BHP Billiton Freehold title to the land

Expansions 1996

and 1998


Acquired 1996 as part of Magma Copper acquisition

Sulphide mining and milling operations discontinued 2009 to restart

FY2013 (1)

Residual SXEW production continues

porphyry copper deposit that consists

of a sulphide enrichment zone overlayed by oxide ore (chrysocolla and brochantite)


Pinto Valley: open-pit Miami Unit:

in-situ leach

Porphyry copper deposit of

low-grade primary mineralisation

power grid


Salt River project

pads, solvent extraction plant, electrowinning plant

Nominal capacity: 120 ktpa


2 SXEW operations at Pinto Valley

and Miami

image

Copper Uranium Olympic Dam

image

560 km northwest of Adelaide,

Public road Copper cathode trucked to ports

100% BHP Billiton Mining lease granted by South Australian

Acquired 2005 as part of WMC acquisition

Underground Large poly-metallic deposit of iron

Supplied via a 275 kV

powerline from

Automated train and trucking network. Crushing,

South Australia Uranium oxide

transported by road to ports

Government

expires 2036 Right of extension for 50 years

Copper

production began 1988 Throughput

raised to 9 mtpa

in 1999 Optimisation project

completed 2002

New copper solvent extraction plant commissioned 2004

oxide-copper-gold

mineralisation

Port Augusta,

transmitted by ElectraNet

storage and ore

hoisting facilities 2 grinding circuits to extract copper

concentrate from

sulphide ore Flash furnace produces copper

anodes, which

are then refined to produce copper cathodes (2)

Nominal capacity: 200 ktpa copper cathode

image

Copper Zinc Antamina

image

Andes mountain

Public road

Copper and zinc

BHP Billiton 33.75% of

Compañía Minera

Mining rights from Peruvian

Commercial production

Open-cut

Zoned porphyry

Long-term contracts with

Primary crusher, concentrator

range, 270 km

concentrates

Compañía Minera Antamina

Government

commenced 2001 and skarn deposit

individual

(nominal capacity

north of Lima, north-central Peru

transported by pipeline to port of Huarmey

Molybdenum

Antamina S.A. Xstrata 33.75% Teck Cominco

22.5%

S.A.

held indefinitely, subject to payment of annual fees

and supply

Capital cost US$2.3 billion (100%)

with central

Cu-only ores and an outer band

of Cu-Zn ore zone

power producers

130,000 tpd), copper and zinc flotation circuits, bismuth/ moly cleaning circuit

and lead/bismuth Mitsubishi 10% concentrates

transported by truck

of information on investment and production

300 km concentrate pipeline (design throughput

2.3 dry mtpa) Port facilities at Huarmey


image

  1. Mining operations previously discontinued in 1998 and restarted in 2007 and again discontinued in 2009.

  2. Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings.


26 | BHP BILLITON ANNUAL REPORT 2012

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1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

Information on Base Metals mining operations continued


image

image

Silver, Lead and Zinc Cannington

300 km southeast

Public road and Group-owned

100% BHP Billiton Mining leases granted by

Concentrate production

Underground Broken Hill-type

On-site power station

Beneficiation plant: primary and

of Mt Isa,

airstrip

Queensland

commenced

silver-lead-zinc

operated under secondary grinding

Queensland, Australia

Product trucked to Yurbi, then by rail to public port

Government expire 2029

1997, subsequent projects improved mill throughput and metal recovery

sulphide deposit

contract

circuits, pre-flotation circuits, flotation circuits, leaching circuits, concentrate filtration circuit, paste plant

Nominal milling capacity: 3.2 mtpa


image


Development projects

Olympic Dam

The proposed expansion of Olympic Dam would be a progressive development requiring construction activity to increase production up to 750 kt per annum (ktpa) of copper, 19 ktpa of uranium oxide and 800 kilo-ounces of gold. On 10 October 2011, the South Australian Government and Australian Commonwealth Government approved the Environmental Impact Statement for the Olympic Dam Project.

We announced on 22 August 2012 that we will not approve the open-pit expansion of our Olympic Dam mine in South Australia in time to meet the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Act 2011 deadline of

15 December 2012. We will investigate a less capital intensive design of the Olympic Dam open-pit expansion, involving new technologies to substantially improve the economics of the project.

Yeelirrie

On 27 August 2012, we announced we have signed an agreement to sell our wholly owned Yeelirrie uranium deposit in Western Australia to Cameco Corporation for US$430 million. The sale is subject to relevant approvals from the Australian Foreign Investment Review Board and Government of Western Australia.

Escondida

Exploration of the Escondida lease and early drilling results have resulted in an announcement of extensive additional mineralisation in close proximity to existing infrastructure and processing facilities, including the Pampa Escondida and Pinta Verde prospects. In FY2012, Escondida has expensed US$104.7 million (US$60.2 million BHP Billiton share) in exploration.

The Escondida Ore Access project provides access to higher-grade ore and commenced the execution phase during FY2011 with first production achieved during the June 2012 quarter. In addition, the Laguna Seca Debottlenecking project, which will provide additional processing capacity, commenced the execution phase in FY2011 and is expected to complete this phase during the second half of

CY2012. Organic Growth Project 1 (OGP1), which is the replacement of the Los Colorados concentrator allowing access to higher-grade ore and additional processing capacity, was approved and moved into the execution phase in February 2012. OGP1 is expected to cost US$3.8 billion (US$2.2 billion BHP Billiton share). In February 2012, BHP Billiton also approved the Oxide Leach Area Project (OLAP), which creates a new dynamic leaching pad and mineral handling system that will include several overland conveyers. The new pad

is expected to maintain oxide leaching capacity at current levels following the exhaustion of the existing heap leach in CY2014.

OLAP is expected to cost US$721 million (US$414 million BHP Billiton share) with commissioning anticipated in the middle of CY2014.

Antamina

In FY2012, Antamina continued execution of the expansion project. With a total investment of US$1.3 billion (US$435 million

BHP Billiton share), the project expands milling capacity by 38 per cent to 130 kt per day (ktpd). The expansion project includes a new

SAG mill, a new 55-kilometre power transmission line, an expanded

truck shop facility and upgrades to the crushing and tailing systems, flotation circuit and port capacity. Commissioning of the SAG mill and first production was achieved in March 2012. The project is more than 92 per cent complete.

Resolution Copper

We hold a 45 per cent interest in the Resolution Copper project in Arizona, United States, operated by Rio Tinto (55 per cent interest).

Resolution Copper is undertaking a pre-feasibility study into

a substantial underground copper mine and processing facility.

In FY2012, Resolution Copper continued to advance the sinking of the No.10 Shaft in order to gain access to the ore deposit for

characterisation work of mineralisation and geotechnical conditions.

Work also continued towards gaining approval from the US Congress for a Federal Land Exchange to access the ore deposit.

2.2.5 Diamonds and Specialty Products Customer Sector Group

Our Diamonds and Specialty Products CSG operates our diamonds business and engages in the exploration and development of a potash business. On 1 February 2012, we announced that we had exercised an option to sell our 37.8 per cent non-operated interest in Richards Bay Minerals to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we announced the sale was complete.

Diamonds

Our diamonds business is comprised of the EKATI Diamond Mine in the Northwest Territories of Canada. EKATI has produced on average almost three million carats per year of rough diamonds

over the last five years. The grade of ore we process fluctuates from year to year, resulting in variations in carats produced. In addition, the proportion of our production consisting of high-value carats (larger and/or higher-quality stones) and low-value carats (smaller and/or lower-quality stones) fluctuates from year to year. EKATI has a reserve life of three years.

Our interest in EKATI consists of an 80 per cent interest in the Core Zone Joint Venture, comprising existing operations and

a 58.8 per cent interest in the Buffer Zone Joint Venture, primarily focusing on exploration targets.

Annual sales from EKATI (100 per cent terms) represented approximately two per cent of current world rough diamond supply by weight and approximately six per cent by value

in FY2012. We sell most of our rough diamonds to international diamond buyers through our Antwerp sales office.

On 30 November 2011, we announced that we are reviewing our diamonds business, comprising our interests in the EKATI Diamond Mine and the Chidliak exploration project in Canada. This review is examining whether a continued presence in the diamonds industry is consistent with our strategy and evaluating the potential sale

of all or part of the diamonds business. On 20 December 2011, we confirmed that we agreed to sell our 51 per cent interest in the Chidliak diamonds exploration project on Baffin Island, Canada, to our joint venture partner, Peregrine Diamonds Ltd.


BHP BILLITON ANNUAL REPORT 2012 | 27

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2 Information on the Company continued



2.2.5 Diamonds and Specialty Products Customer Sector Group continued

Potash

Our potash strategy is to build a material industry position over the long term. We continue advancing the Jansen Project, a greenfield potash project in Saskatchewan, Canada. Jansen progressed

into the feasibility study phase (an advanced stage of our project approvals process) in February 2011. Approved spending for Jansen is US$1.1 billion.

Jansen is designed ultimately to produce approximately eight mtpa of agricultural grade potash.

We are also continuing to study other potential projects in the Saskatchewan potash basin, including Young, Boulder and Melville, and are progressing these projects in the context of our development portfolio.

We are conducting a potash exploration program, including 3D seismic survey and drilling programs. We have approved spending of almost US$2 billion (including Jansen and other acquisitions)


in respect of developing our potash business. Our permit positions for potash extend over 14,500 square kilometres in the Saskatchewan basin.

Titanium minerals

Our principal interest in titanium minerals consists of our

37.8 per cent economic interest in Richards Bay Minerals (RBM). RBM is a major producer of titania slag, high-purity pig iron, rutile and zircon from mineral sands. Approximately 90 per cent of the titanium dioxide slag produced by RBM is suitable for the chloride process of titanium dioxide pigment manufacture and is sold internationally under a variety of short-, medium- and long-term contracts.

On 1 February 2012, we announced that we exercised an option to sell our non-operated interest in RBM to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we

announced the sale was complete. The sale price was US$1.9 billion before adjustments.

Information on Diamonds and Specialty Products mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

image

image

Diamonds EKATI Diamond Mine

310 km

Aircraft

Core Zone JV

BHP Billiton Mining leases

Production

Fox: open-cut

JV owned and

Crushers, washers/

northeast of

Ice road open

BHP Billiton 80%

granted by

began 1997

Koala and Koala

operated diesel scrubber and grinder

Yellowknife, Northwest Territories, Canada

approximately 10 weeks

per year

Buffer Zone JV BHP Billiton 58.8%

Remaining interest held

by 2 individuals

Canadian Government until 2022

Mine and processing plant began operating 1998

Ownership increased with acquisition of Dia Met Minerals in 2001

North: underground power station Eocene age

kimberlite pipes

– dominantly volcaniclastic infill

and heavy media separator Magnetics and

X-ray sorters for

diamond recovery Fuel storage

image

Titanium minerals Richards Bay Minerals

image

10–50 km north Public road

BHP Billiton

Rio Tinto Long-term

RBM formed 1976 Dune sand

Eskom

4 dune sand

of Richards Bay, Product

    1. % economic

      renewable mineral

      Fifth mine added

      dredging

      (national utility dredge mines,

      KwaZulu-Natal, transported

      interest through

      leases from South

      2000

      Quaternary age

      company)

      minor supplementary

      South Africa

      by public rail

      50% interest

      African Government One mining plant coastal dune

      dry mining

      to port

      in the 2 legal entities that comprise RBM,

      subject to South African Mining Charter

      decommissioned in 2008

      Announced

      deposits – heavy mineral sands concentrated

      Gravity separation produces heavy mineral concentrate

      Richards Bay

      exercise of option by wave and

      which is trucked

      Mining (Pty) Ltd and Richards Bay Titanium (Pty) Ltd

      RBM functions as a single economic entity


      image

      1. Smelter processes ilmenite to produce titanium dioxide slag and high-purity iron.


Development projects

to sell interest in RBM on

1 February 2012 and completion of the sale on

7 September 2012


Diamonds

wind action

to central processing plant to produce rutile, zircon

and ilmenite Nominal titanium slag capacity (1)

1.05 mtpa

Jansen Potash Project

On 24 June 2011, we approved US$488 million of pre-commitment spending to fund early-stage site preparation for surface construction, procurement of long lead time items and the first sections of the production and service shafts. On 30 June 2011, the Saskatchewan Ministry of Environment approved our Environmental Impact Statement for the development of the Jansen project.

We are currently executing a ground freezing program in which the ground will be frozen using a closed system of refrigeration pipes through which brine is circulated. Excavation of shafts is also under way with shaft collars completed and shaft sinking due to begin

by the end of CY2012. Sinking headframes and hoists are also being installed. The eventual depth of the service and production shafts will be approximately one kilometre.

On 9 May 2011, we approved the Misery open-pit project at

the EKATI Diamond Mine in the Northwest Territories of Canada. This project consists of a pushback of the existing Misery open-pit, which was mined from 2001 to 2005. Stripping operations began in September 2011, with ore production expected to begin in late 2015 and final production from Misery expected in mid-2017. The estimated capital expenditure required to complete the execution phase is US$323 million (BHP Billiton share).


28 | BHP BILLITON ANNUAL REPORT 2012

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2.2.6 Stainless Steel Materials Customer Sector Group

Our Stainless Steel Materials CSG is primarily a supplier of nickel to the stainless steel industry. Nickel is an important component of the most commonly used types of stainless steel. We also supply nickel to other markets, including the specialty alloy, foundry, chemicals and refractory material industries. We are the world’s fifth-largest producer of nickel and we sell our nickel products under a mix of long-term, medium-term and spot volume contracts, with prices linked to the LME nickel price.

Our nickel business comprises two Assets:

Nickel West

Nickel West is the name for our wholly owned Western Australian nickel asset, which consists of an integrated system of mines, concentrators, a smelter and a refinery. We mine nickel-bearing sulphide ore at our Mt Keith, Leinster and Cliffs Operations north of Kalgoorlie. We operate concentrator plants at Mt Keith and

at Leinster, which also concentrate ore from Cliffs. Leinster and Mt Keith have reserve lives of eight and 13 years, respectively,

both have options for further expansion. The Mt Keith Talc Redesign project, which enables the processing of talc bearing ore, was successfully commissioned in December 2011. Cliffs is a high-grade underground mine with a reserve life of three years.

We also operate the Kambalda concentrator south of Kalgoorlie, where we source ore through tolling and concentrate purchase arrangements with third parties in the Kambalda region. We also have purchase agreements in place for the direct purchase

of concentrate, which we re-pulp, dry and blend with other concentrate processed at Kambalda.


Information on Stainless Steel Materials mining operations

We transport concentrate from Leinster, Mt Keith and Kambalda to our Kalgoorlie smelter, where it is processed into nickel matte, containing approximately 67 per cent nickel. In FY2012, we


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

exported approximately 48 per cent of our nickel matte production. We processed the remaining nickel matte at our Kwinana nickel refinery, which produces nickel metal in the form of LME grade briquettes, and nickel powder together with a range of saleable

by-products.

Nickel West production in FY2012 was 109 kt of contained nickel.

During FY2012, the Nickel West Kwinana hydrogen plant was successfully commissioned following a restriction in hydrogen supply, which impacted production of nickel metal from the Kwinana nickel refinery.

Cerro Matoso

Cerro Matoso, our 99.94 per cent owned nickel asset in Colombia, combines a lateritic nickel ore deposit with a ferronickel smelter. Cerro Matoso is the world’s second-largest producer of ferronickel and is one of the lowest-cost producers of ferronickel. The smelter produces high-purity, low-carbon ferronickel granules. Cerro Matoso has an estimated current reserve life of 32 years. Production in FY2012 was 48.9 kt of nickel in ferronickel form following the successful early completion of the planned furnace replacement.

Cerro Matoso operates under mining concessions that are due to expire on 30 September 2012 and has applied, in accordance with the law and its contracts, for an extension of these mining

concessions. If this extension is not granted, Cerro Matoso has an underlying agreement with the Colombian Government that grants it the rights to continue mining and producing through to 2029 under a mining arrangement, with a further extension of 15 years possible.


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).


image

image

Nickel Mt Keith

Western Australia

Private road Nickel concentrate

transported by

road to Leinster nickel operations for drying and

100% BHP Billiton Leases over the land from

Western Australian Government

Key leases expire 2013–2033

Renewals at

Officially commissioned 1995 by WMC

Mt Keith was acquired as part of acquisition of WMC in 2005

Open-cut Disseminated textured magmatic

nickel-sulphide

mineralisation, associated with a metamorphosed

On-site third party gas-fired turbines

Natural gas sourced and transported under separate

Concentration plant with a nominal capacity:

11.5 mtpa of ore


image

image

Leinster

on-shipping

government discretion

ultramafic intrusion long-term

contracts

Western

Public road

100% BHP Billiton Leases over

Production

Underground and

On-site third

Concentration

Australia

Nickel

the land from

commenced 1979 open-cut

party gas-fired

plant with a


Cliffs

Western

concentrate shipped by road and rail to Kalgoorlie nickel smelter


image

image

Private road

Western Australian Government

Key leases expire 2013–2031

Renewals at government discretion


100% BHP Billiton Leases over

Leinster was acquired as part of acquisition of WMC in 2005


Production

Steeply dipping disseminated and massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows and intrusions


Underground

turbines Natural gas sourced and

transported

under separate long-term contracts


Supplied from

nominal capacity: 3 mtpa of ore


Mine site

Australia

Nickel ore

the land from

commenced 2008 Steeply dipping

Mt Keith

transported by road to Leinster nickel operations for further processing

Western Australian Government

Key leases expire 2025–2028

Renewals at government discretion

Cliffs was acquired as part of acquisition

of WMC in 2005

massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic

lava flows


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2 Information on the Company continued



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Information on Stainless Steel Materials mining operations continued


Mine Type &

Mine & Location

Means

of Access Ownership Operator

Title, Leases

or Options History

Mineralisation

Style Power Source

Facilities, Use & Condition

Nickel continued

image

image

Cerro Matoso

Montelibano,

Public road BHP Billiton

BHP Billiton Existing mining

Mining

Open-cut

National

Ferronickel

Córdoba, Colombia

99.94%

Employees and

concessions either renewable as of

commenced 1980 Nickel-laterite Nickel production mineralisation

electricity grid smelter and

under contracts refinery integrated

former employees

1 October 2012

started 1982

formed from

expiring

with the mine

0.06%

with 30-year

Ownership

residual weathering December 2014 Beneficiation plant:

extension until

increased to 53% of ophiolitic

Domestic

primary and

2042 or, in absence of extension, to

be automatically incorporated on

1 October 2012 into a larger area mining lease with a term until 2029 with

the possibility

of an extension for a further 15 years

in 1989 and to 99.94% in 2007

Expansion project to double installed capacity completed 2001

peridotite

natural gas for drier and kiln operation supplied by pipeline from national grid

Gas supply contracts expiring December 2021

secondary crusher Nominal capacity: 50 ktpa of nickel

in ferronickel form

Actual capacity depends on nickel grade from the mine


image


image

Information on Stainless Steel Materials smelters, refineries and processing plants

Smelter, Refinery

or Processing Plant Location Ownership Operator

Title, Leases

or Options Product

Nominal Production

Capacity Power source

Nickel

image

image

Kambalda

Nickel concentrator 56 km south

of Kalgoorlie, Western

100% BHP Billiton Mineral leases

over the land from Western Australian

Concentrate containing approximately

1.6 mtpa ore

Ore sourced through tolling and concentrate

On-site third party gas-fired turbines

Natural gas sourced and


image

Kalgoorlie

Australia

Government

expire 2028 Renewals at government

image

discretion

14% nickel

purchase arrangements transported under separate with third parties long-term contracts

in Kambalda region

Nickel smelter Kalgoorlie, Western Australia


image

image

Kwinana

Nickel refinery 30 km south of Perth, Western Australia

100% BHP Billiton Freehold title

over the property


100% BHP Billiton Freehold title

over the property

Matte containing approximately 67% nickel


LME grade

nickel briquettes, nickel powder Also intermediate

products, including

copper sulphide, cobalt-nickel- sulphide, ammonium-sulphate

110 ktpa nickel matte On-site third party

gas-fired turbines Natural gas sourced and

transported under separate

long-term contracts


65 ktpa nickel metal A combination of power

generated by Southern Cross Energy and distributed via Western Power’s network and power sourced from other generators on the Western Power network


image


Development projects

Cerro Matoso expansion options

Cerro Matoso has undertaken conceptual studies on options for expanding production. A feasibility study is in progress for the Cerro Matoso Heap Leach project.

2.2.7 Iron Ore Customer Sector Group

Our Iron Ore CSG consists of our Western Australia Iron Ore (WAIO) interests and a 50 per cent interest in the Samarco Joint Venture

in Brazil. We are one of the leading iron ore producers in the world. We sell lump and fines product produced in Australia and pellets from our operations in Brazil.

Western Australia Iron Ore

WAIO’s operations involve a complex integrated system of mines and more than 1,000 kilometres of rail infrastructure and

port facilities in the Pilbara region of northern Western Australia. Our strategy is to maximise output utilising available infrastructure at our disposal.

Our WAIO operations consist of three joint ventures: Mt Newman, Yandi and Mt Goldsworthy, and our 100 per cent interest in Jimblebar. Our interest in these joint ventures is 85 per cent. Mitsui and ITOCHU own the remaining 15 per cent. Along with the other joint venture participants, we have entered into marketing agreements in the form of joint ventures with certain customers. These joint ventures,



30 | BHP BILLITON ANNUAL REPORT 2012

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2.2.7 Iron Ore Customer Sector Group continued

JW4, Wheelarra and POSMAC, involve subleases of part of WAIO’s existing mineral leases whereby ore is sold to the existing joint ventures with contractual terms applying to the customers’ share. As a consequence, we are entitled to 85 per cent of production from these subleases and the customer joint ventures are accounted for as marketing arrangements rather than as jointly controlled assets.

We have been expanding our WAIO operations in response to increasing demand for iron ore. Since 2001, we have completed six expansion projects to increase our system production capacity

from 69 mtpa to 190 mtpa (100 per cent basis). Our share of FY2012 production was 148.1 Mt of ore. We now have additional projects

in various stages of the project life cycle (including construction) to further increase system capacity (see Development projects below).

Our Pilbara reserve base is relatively concentrated, allowing us to plan our development around a series of integrated ‘mining hubs’ joined to the orebodies by conveyors or spur lines. This approach enables us to maximise the value of installed infrastructure by using the same processing plant and rail infrastructure for a number

of orebodies. Blending ore at the hub gives us greater flexibility to respond to changing customer requirements as well as changing properties in the ore being mined and reduces the risk of port bottlenecks.


Information on Iron Ore mining operations

The reserve lives of our mines range from 14 years at Yandi to 44 years at Jimblebar.


1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

Acquisition of HWE Mining Subsidiaries

On 30 September 2011, BHP Billiton completed its acquisition

of HWE Mining Subsidiaries from Leighton Holdings. The acquisition relates to the mining equipment, people and related assets that service the Area C, Yandi and Orebody 23 and 25 Operations.

These operations collectively account for almost 70 per cent of WAIO’s total material movement. The amount paid was US$710 million (A$725 million) representing purchase consideration of US$449 million and settlement of pre-existing obligations of US$241 million and US$20 million for transitional services to be provided post acquisition.

Samarco

We are a 50–50 joint venture partner with Vale at the Samarco Operation in Brazil. Samarco is currently comprised of a mine and two concentrators located in the State of Minas Gerais,

and three pellet plants and a port located in the State of Espirito Santo. Two 396-kilometre pipelines connect the mine site to the pelletising facilities.

In FY2012, our share of production was 10.7 Mt of pellets. Samarco’s total ore reserve is about 2.1 billion tonnes.


Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).


image

image

Iron ore Mt Newman JV

Pilbara region, Private road

BHP Billiton 85% BHP Billiton:

Mining lease under

Production began

Open-cut

Alinta Dewap’s

Newman Hub:

Western

Iron ore shipped Mitsui ITOCHU Mt

the Iron Ore (Mt

Mt Whaleback

Bedded ore types

Newman gas-fired primary and

Australia

by Mt Newman

Iron 10%

Whaleback

Newman)

orebody 1969

classified as per

power station via

secondary crushing

Mt Whaleback JV owned rail

ITOCHU Minerals Orebodies

Agreement Act

Production from

host Archaean or

Mt Newman JV

and screening plants

Orebodies 18, 23, 25,

to JV’s Nelson Point shipping

and Energy of Australia 5%

29 and 30 Orebodies

1964 expires 2030 with right to

orebodies 18, 23,

25, 29 and 30

Proterozoic iron formation,

owned power lines (nominal capacity

53 mtpa); heavy

29 and 30

facilities and

23 and

successive renewals complements

which are

media beneficiation


image

Yandi JV

Mt Goldsworthy JV’s Finucane Island shipping facilities,

Port Hedland

25 (since October 2011)

Independent contractors: Orebody 18 Orebodies 23 and

image

25 (until October 2011)

of 21 years

production from Mt Whaleback

First ore from Newman Hub as part of RGP4 construction delivered 2009

Brockman, Marra Mamba and Nimingarra

plant, stockyard blending facility, single cell rotary car dumper,

train-loading facility Orebody 23/25: primary and

secondary crushing

and screening plant (nominal capacity 10 mtpa)

Pilbara region, Private road

BHP Billiton 85% BHP Billiton

Mining lease under

Development

Open-cut

Alinta Dewap’s

Three processing

Western Australia

Iron ore shipped Mitsui Iron Ore by JV owned rail Corporation 7%

(since October

the Iron Ore (Marillana Creek)

began 1991

First shipment

Channel Iron Deposits are

Newman gas-fired plants, primary power station via crusher and

to Finucane Island and Nelson Point

ITOCHU Minerals 2011)

and Energy of Previously Australia 8% operated by

Agreement Act

1991 expires 2033 with one renewal

1992

Capacity expanded

Cainozoic fluvial sediments

Mt Newman JV overland conveyor

owned power lines (normal capacity

75 mtpa)

shipping

facilities, Port Hedland

Our railway spur links Yandi mine to Newman main line

independent right to a further

contractors 21 years

between 1994–2011

Ore delivered to

two train-loading facilities


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2 Information on the Company continued



image

Information on Iron Ore mining operations continued


Mine Type &

Mine & Location

Means

of Access Ownership Operator

Title, Leases

or Options History

Mineralisation

Style Power Source

Facilities, Use & Condition

Iron ore continued

image

image

JW4 JV

Pilbara region, Private road

BHP Billiton 68% BHP Billiton

Sublease from

Operations

Open-cut

Alinta Dewap’s

Mine site

Western

Iron ore on-sold

ITOCHU Minerals (since

Yandi JV, with

began April 2006

Channel Iron

Newman gas-fired

Australia

to Yandi JV,

and Energy of

October

mining lease

Ore currently being

Deposits are

power station via

then transported Australia 6.4%, via rail to Mitsui Iron Ore Finucane Island Corporation

2011)

Previously operated by

under the Iron Ore (Marillana Creek) Agreement Act

produced is sold to Yandi JV and blended with

Cainozoic fluvial sediments

Mt Newman JV owned power lines

and Nelson

5.6%,

independent 1991 expires 2033

Yandi ore


image

Jimblebar

Point shipping facilities,

Port Hedland

JFE Steel Australia 20% Sublease

agreement

image

over JW4 deposit

contractors

with one renewal right for a further 21 years

Pilbara region, Private road BHP Billiton

New mine

Mining lease

Production at

Open-cut

Alinta Dewap’s

Primary and

Western Australia

100% of the Jimblebar lease

is currently under the Iron under Ore (McCamey’s construction Monster)

Jimblebar began in March 1989

From 2004,

Bedded ore types classified as per host Archaean or

Newman gas-fired secondary

power station via crusher are in the Mt Newman JV commissioning


image

Wheelarra

which

BHP Billiton will operate

Agreement

Authorisation Act 1972 expires

2030 with rights to successive renewals of

image

21 years

production was transferred to Wheelarra as part of the Wheelarra sublease agreement

Proterozoic banded iron formation, which are Brockman and Marra Mamba

owned power lines phase (nominal

capacity 35 mtpa at full capacity

in FY2014)

Pilbara region, Private road

BHP Billiton 51% Operated by Sublease agreement Wheelarra JV

Open-cut

Alinta Dewap’s

Primary crushing

Western

Iron ore shipped ITOCHU Minerals independent over the Wheelarra

produces iron ore

Bedded ore types

Newman gas-fired plant (nominal

Australia

by Mt Newman JV owned rail to Port Hedland via 32 km spur

and Energy of Australia 4.8%, Mitsui Iron Ore Corporation

contractors

deposit of Jimblebar lease with ITOCHU Minerals and

from Wheelarra deposit of Jimblebar lease

Ore currently being

classified as per host Archaean or Proterozoic banded iron

power station via Mt Newman JV owned power lines

capacity 14.5 mtpa)

line linking

4.2%,

Energy of Australia, produced is sold

formation, which

to Newman main line

Maanshan Iron & Steel Australia 10%,

Shagang Australia 10%, Hebei Iron &

Mitsui Iron Ore and four separate subsidiaries

of Chinese steelmakers

As a consequence

to Mt Newman JV and blended with ore produced from Mt Whaleback and satellite orebodies 18, 23

are Brockman and Marra Mamba

Steel Australia of this arrangement, and 25 to create


Mt Goldsworthy JV

Pilbara region, Private road

10%,

Wugang Australia 10% Sublease

agreement

image

over Wheelarra deposit


image

BHP Billiton 85% BHP Billiton

we are entitled to 85% of the production from the Wheelarra

sublease consistent with BHP Billiton ownership in

Mt Newman JV


4 mineral leases

Mt Newman blend


Operations


Open-cut mine


Yarrie and


Area C: ore

Western

Iron ore

Mitsui Iron Ore

(since

under the Iron Ore

commenced

includes Area C,

Nimingarra: Alinta processing plant,

Australia Area C Yarrie

Nimingarra

shipped by

Mt Goldsworthy JV owned rail

to JV’s Finucane

Corporation 7% and ITOCHU Minerals and Energy of

October 2011)

Previously operated by

(Mt Goldsworthy) Agreement Act 1964 and the Iron Ore (Goldsworthy

Mt Goldsworthy 1966, at Shay

Gap 1973

Original

Yarrie and Nimingarra Bedded ore types

classified as per

Dewap’s Port Hedland gas-fired power station under long-term

primary crusher and overland conveyor (nominal capacity: 50 mtpa)

Island and Mt

Australia 8%

independent – Nimingarra)

Goldsworthy

host Archaean

contracts

Yarrie: mobile in-pit

Newman JV’s Nelson Point

contractors

Agreement Act 1972, expire

mine closed 1982 Associated

or Proterozoic iron Area C: Alinta formation, which Dewap’s Port

crushing plant (nominal capacity:

shipping

between 2014

Shay Gap mine

are Brockman, Newman gas-fired 2 mtpa)

facilities,

and 2028, with

closed 1993

Marra Mamba and power station

Primary crushers

Port Hedland

rights to successive Mining at

Nimingarra

under long-term

at Yarrie and

Goldsworthy JV railway spur links Area C mine to Newman

main line

renewals of 21 years

A number of smaller mining leases granted under the Mining Act 1978 expire

in 2026

Nimingarra mine ceased 2007, has since continued from adjacent Yarrie area

Opened Area C mine in 2003

contracts

Nimingarra in care and maintenance


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1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

Information on Iron Ore mining operations continued



Mine Type &


Mine &

Means


Title, Leases


Mineralisation

Facilities, Use

Location

of Access

Ownership

Operator or Options

History

Style

Power Source & Condition

Iron ore continued

image

image

POSMAC JV

Pilbara Region,

Private road Iron ore on-sold

BHP Billiton 65% BHP Billiton ITOCHU Minerals (since

Sublease over

part of the mineral

Operations commenced

Open-cut Bedded ore types

Alinta Dewap’s Newman gas-fired

Mine site

Western

Australia

to Goldsworthy JV, it is then transported via

and Energy of Australia 8%, Mitsui Iron Ore

October

2011)

Previously

lease held by

Mt Goldsworthy JV under the Iron Ore

October 2003

The ore currently being produced is

classified as per host Archaean or Proterozoic iron

power station

under long-term contracts

Goldsworthy-

Corporation 7%, operated by

(Mt Goldsworthy)

sold to the

formation, which

owned rail to

POSCO 20%

independent Agreement Act

Goldsworthy JV

are Brockman,


image

image

Samarco

JV’s Finucane Island and Nelson Point shipping facilities, Port Hedland

Sublease agreement over POSMAC deposit

contractors

1964 with rights to successive renewals of

21 years

and blended with Area C ore

Marra Mamba and Nimingarra

Southeast

Public road

BHP Billiton 50% Samarco Mining concessions Production began

Open-cut

Samarco holds

Facilities with

Brazil

Conveyor

Vale 50%

granted by Brazilian at Germano mine

Itabirites

interests in 2

capacity to process

belts transport iron ore to beneficiation plant

Two slurry pipelines transport concentrate

to pellet plants on coast

Iron pellets exported via port facilities

Government as long as Alegria complex mined according to agreed plan

1977, at Alegria

complex 1992 Two expansions completed with

a second pellet

plant built in 1997 and a third pellet plant, second concentrator and second pipeline built in 2008

In April 2011, Samarco’s shareholders approved the fourth pellet plant

(metamorphic quartz-hematite rock) and friable hematite ores

hydroelectric power plants which supply 18% of its electricity

Additional power is acquired in the market

Contracts will expire by the end of 2014 and their extension is under negotiation

and pump 24 mtpa ore concentrate and produce and ship

    1. mtpa pellets (100% basis)


      image


      Development projects

      Western Australia Iron Ore

      In March 2011, we announced approval of an additional US$7.4 billion (BHP Billiton share US$6.6 billion) of capital expenditure to continue production growth in our WAIO operations. This investment is

      the final approval of projects initiated in 2010, with pre-commitment funding of US$2.3 billion (BHP Billiton share US$2.1 billion). It is expected to deliver an integrated operation with a minimum capacity of 220 mtpa (100 per cent basis), with first production expected from Jimblebar early in CY2014.

      This additional investment includes:

      • US$3.4 billion (BHP Billiton share US$3.3 billion) to develop the Jimblebar mine and rail links, and procure mining equipment and rolling stock to deliver an initial capacity of 35 mtpa, expandable to 55 mtpa. Work on this project was 34 per cent complete as

        at 30 June 2012;

      • US$2.3 billion (BHP Billiton share US$1.9 billion) to further develop Port Hedland, including two additional berths and shiploaders,

        a car dumper, connecting conveyor routes and associated rail works and rolling stock. Work on this project was 59 per cent complete as at 30 June 2012;

      • US$1.7 billion (BHP Billiton share US$1.4 billion) for port blending facilities and rail yards to enable ore blending, expand resource life and establish options for future growth of the business beyond the Inner Harbour. Work on this project was 22 per cent complete as at 30 June 2012.

Western Australia Iron Ore – Dual Harbour Strategy

In February 2012, we announced approval of US$917 million (BHP Billiton share US$779 million) in pre-commitment funding for the construction of an outer harbour facility associated with our WAIO operations.

On 24 August 2012, we announced that the Western Australia Minister for Transport and Port Hedland Port Authority has granted WAIO the right, subject to the State approvals processes, to develop

two additional berths in the Inner Harbour. We also announced work on the Outer Harbour Development has been slowed while our focus has shifted to maximising our potential capacity from the

Inner Harbour. Development of the Outer Harbour remains attractive in the long term.

Western Australia Iron Ore – Orebody 24 mine

In November 2011, we announced approval of a US$822 million (BHP Billiton share US$698 million) investment for the development of the Orebody 24 mine, located approximately 10 kilometres northeast of Newman, Western Australia, Orebody 24 is a sustaining mine to maintain iron ore production output from the Mt Newman JV operations. Orebody 24 is expected to have a capacity of 17 mtpa and will include the construction of an ore crushing plant, train loadout facility, rail spur and other associated support facilities.

Initial mining is expected to begin in the second half of CY2012.

Samarco

During FY2011, Samarco shareholders approved a US$3.5 billion (BHP Billiton share US$1.75 billion) expansion project consisting of a fourth pellet plant, a new concentrator and a third slurry pipeline. The project is expected to expand Samarco’s iron ore

pellet production capacity from 22.2 mtpa to 30.5 mtpa. First pellet production is expected in the first half of CY2014.

West Africa

We are carrying out exploration activities in Guinea and Liberia, West Africa.

Guinea Iron Ore

BHP Billiton currently has a 41.3 per cent interest in a joint venture that holds the Nimba Mining Concession and four iron ore prospecting permits in southeast Guinea. The joint venture is undertaking

a pre-feasibility study for the development of the Concession and associated transport infrastructure. Once developed, it is envisaged that the mine will deliver a high-grade direct shipping ore to market.


BHP BILLITON ANNUAL REPORT 2012 | 33

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2 Information on the Company continued



      1. Iron Ore Customer Sector Group continued

        Liberia Iron Ore

        BHP Billiton currently has a 100 per cent interest in a Mineral Development Agreement with the Government of Liberia.

        This enables the further exploration and development of our Liberian iron ore mineral leases, each of which are proximate to existing rail and port infrastructure. Exploration and development of these leases continues, with drilling conducted on select targets.

      2. Manganese Customer Sector Group

        Our Manganese CSG produces a combination of ores and alloys from sites in South Africa and Australia. We are the world’s largest producer of manganese ore and one of the top global producers of manganese alloy. Manganese alloy is a key input into the steelmaking process. Manganese high-grade ore is particularly valuable to alloy producers because of the value in use differential over low-grade ore, which is the degree to which high-grade

        ore is proportionately more efficient than low-grade ore in the alloying process.

        Our strategy is to focus on upstream resource businesses. Manganese alloy smelters are a key conduit of manganese units into steelmaking and enable us to access markets with an optimal mix of ore and alloy, optimise production to best suit market conditions and give us technical insight into the performance of our ores in smelters.

        Approximately 80 per cent of ore production is sold directly to external customers and the remainder is used as feedstock in our alloy smelters.

        We own and manage all manganese mining operations and alloy plants through joint ventures with Anglo American. We own

        60 per cent of the joint ventures. Our joint venture interests are held through Samancor Manganese, which operates our global Manganese assets. In South Africa, Samancor Manganese

        (Pty) Ltd owns 74 per cent of Hotazel Manganese Mines (Pty) Ltd (HMM) and 100 per cent of the Metalloys division. This gives BHP Billiton an effective interest of 44.4 per cent in HMM and 60 per cent in Metalloys. The remaining 26 per cent of HMM

        is owned under the terms of South African Black Economic Empowerment (BEE) legislation, which reflects our commitment to economic transformation in South Africa. In Australia, we own 60 per cent of Groote Eylandt Mining Company Pty Ltd (GEMCO) and we have an effective interest of 60 per cent in Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO) through GEMCO, which owns 100 per cent of TEMCO.

        In response to challenging market conditions in the manganese alloy industry, we announced the temporary suspension of production at TEMCO, Australia, and the cessation of production

        Information on Manganese mining operations


        of energy-intensive silicomanganese at the Metalloys South plant, South Africa, during the March 2012 quarter. After extensive stakeholder consultation and the identification of significant cost reduction opportunities, in May 2012, we announced our decision to restart TEMCO, which is currently in progress and planned to complete in CY2012.

        Mines

        HMM

        HMM owns the Mamatwan open-cut mine and the Wessels underground mine. Manganese high-grade ore is particularly valuable to alloy producers because of the ‘value in use differential’ over low-grade ore, which is the degree to which high-grade ore is proportionately more efficient than low-grade ore in the alloying process. The ore from these mines only requires crushing and screening to create saleable product. In FY2012, the total manganese ore production was 3,625 kt, 21 per cent higher than FY2011 production. Wessels has a reserve life of 46 years and Mamatwan has a reserve life of 21 years.

        GEMCO

        As a result of its location near our port facilities and its simple, open-cut mining operation, GEMCO is one of the world’s

        lowest-cost manganese ore producers. These simple operations, combined with its high-grade ore and relative proximity to Asian export markets, make GEMCO unique among the world’s manganese mines. FY2012 production of manganese ore was 4,306 kt, five per cent higher than FY2011 production. GEMCO has a reserve life of 12 years.

        Alloy Plants Metalloys

        The Samancor Manganese Metalloys alloy plant is one of the

        largest manganese alloy producers in the world. Due to its

        size and access to high-quality feedstock from Hotazel operations, it is also one of the lowest-cost alloy producers of medium-carbon ferromanganese. Metalloys only produces high- and medium-carbon ferromanganese, after silicomanganese production ceased due

        to the permanent closure of the energy-intensive Metalloys South plant in January 2012. The annual production capacity of silicomanganese was 120 ktpa.

        TEMCO

        TEMCO is a medium-sized producer of high-carbon ferromanganese, silicomanganese and sinter using ore shipped from GEMCO, primarily using hydroelectric power.

        The following table contains additional details of our mining operations. These tables should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).



        Mine Type &


        Mine &

        Means


        Title, Leases


        Mineralisation

        Facilities, Use

        Location

        of Access

        Ownership

        Operator or Options

        History

        Style

        Power Source & Condition

        image

        image

        Manganese ore Hotazel Manganese Mines (Pty) Ltd (HMM)

        Kalahari Basin,

        Public road

        BHP Billiton

        BHP Billiton Existing New

        Mamatwan

        Mamatwan:

        Eskom

        Mamatwan

        South Africa

        Most ore and

        44.4%

        Order Rights valid

        commissioned

        open-cut

        (national power beneficiation plant:

        Mamatwan and Wessels mines

        sinter products transported

        by rail Approximately 33% of ore

        beneficiated

        locally, balance exported via Port Elizabeth, Richards Bay, Durban

        Anglo American 29.6%

        Ntsimbintle 9%

        NCAB 7%

        Iziko 5%

        HMM Education Trust 5%

        until 2035

        1964

        Wessels commissioned 1973

        Wessels: underground Banded Iron

        Manganese ore

        type

        supplier)

        primary, secondary and tertiary crushing with associated screening plants

        Dense medium separator and sinter plant (capacity

        1 mtpa sinter) (1) Wessels: primary and secondary

        crushing circuits

        with associated screening (1)


        image

        1. Capacity: Mamatwan – approximately 3.5 mtpa of ore; Wessels – approximately 1 mtpa of ore.



        34 | BHP BILLITON ANNUAL REPORT 2012

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        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        Information on Manganese mining operations continued



        Mine Type &


        Mine &

        Means


        Title, Leases


        Mineralisation

        Facilities, Use

        Location

        of Access

        Ownership

        Operator or Options

        History

        Style

        Power Source & Condition

        Manganese ore continued

        image

        image

        Groote Eylandt Mining Company Pty Ltd (GEMCO)

        Groote Eylandt,

        Ore transported

        BHP Billiton 60%

        BHP Billiton All leases on

        Commissioned

        Open-cut

        On-site diesel

        Beneficiation

        Northern

        from concentrator Anglo American

        Aboriginal land

        1965

        Sandstone

        power

        process: crushing,

        Territory, Australia

        by road train to port at Milner Bay

        40%

        held under Aboriginal Land Rights (Northern Territory) Act 1976

        Valid until 2031

        claystone sedimentary Manganese ore type

        generation

        screening, washing and dense media separation

        Produces lump and fines products Capacity:

        4.2 wet mtpa


        image


        image

        Information on Manganese smelters, refineries and processing plants


        Smelter, Refinery or

        Processing Plant Location Ownership Operator


        Title, Leases

        or Options Product


        Nominal Production

        Capacity Power source

        Manganese alloy

        image

        image

        Metalloys

        Manganese alloy plant (division of Samancor Manganese (Pty) Ltd)

        Meyerton, South Africa

        BHP Billiton 60%

        Anglo American 40%

        BHP Billiton Freehold title over

        property, plant and equipment

        Manganese alloys including high-carbon ferromanganese, refined

        (medium-carbon ferromanganese) alloy

        400 ktpa high-carbon ferromanganese (including hot metal) 90 ktpa medium- carbon ferromanganese

        Eskom

        30 MW of internal power generated from furnace off-gases


        image

        image

        Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO)

        Manganese alloy plant Bell Bay,

        Tasmania, Australia

        BHP Billiton 60%

        Anglo American 40%

        BHP Billiton Freehold title over

        property, plant and equipment

        Ferroalloys,

        including high-carbon ferromanganese, silicomanganese

        and sinter

        130 ktpa high-carbon ferromanganese

        125 ktpa silicomanganese 350 ktpa sinter

        Aurora Energy

        On-site energy recovery unit generates 11 MW for internal use


        image


        Development projects

        GEMCO expansion

        The partners in Samancor Manganese approved the second expansion of the GEMCO Operation in the Northern Territory

        of Australia in July 2011. This follows the successful commissioning of the GEMCO expansion phase 1 (GEEP1) project in April 2009.

        The US$279 million GEEP2 project (BHP Billiton share US$167 million) has commenced and will increase GEMCO’s beneficiated product capacity from 4.2 mtpa to 4.8 mtpa through the introduction

        of a dense media circuit by-pass facility. The project is expected to be completed in late CY2013. The expansion will also address infrastructure constraints by increasing road and port capacity to 5.9 mtpa, creating 1.1 mtpa of additional capacity for

        future expansions.

        HMM

        Due to subsurface challenges experienced, which impacted progress and budget, the central block development project at Wessels was re-phased. The US$92 million Phase 1 project will be completed in FY2014. It will comprise the construction of the ventilation shaft and development of the associated underground ventilation network.

        Phase 2 of the project is in the feasibility phase and will comprise the completion of the underground crusher and mobile workshops.

        Upon completion of Phases 1 and 2, the Wessels mine capacity will increase from 1 mtpa to 1.5 mtpa.

        Metalloys

        The High-Carbon Ferromanganese (HCFeMn) furnace M14 at the Metalloys West Plant was approved for execution in November 2010 with a total approved investment of US$91 million (US$54.6 million BHP Billiton share). This furnace will add an additional 130 ktpa capacity (100 per cent or about 78 ktpa BHP Billiton share) of HCFeMn and replace the closed South Plant silicomanganese (capacity of 120 ktpa), to take Metalloys capacity to 500 ktpa.

        The M14 furnace will contribute to power efficiency at the Metalloys site as it will add to the site’s own generation capacity utilising the furnace off-gases. Completion of the furnace is expected during FY2013.

        Samancor Gabon Manganese project

        A feasibility study for the establishment of a new 300 ktpa mine in Franceville, Gabon, commenced in July 2010. The project has experienced delays in concluding key agreements and has been placed under review.

      3. Metallurgical Coal Customer Sector Group

Our Metallurgical Coal CSG is the world’s largest supplier

of seaborne metallurgical coal. Metallurgical coal, along with iron ore and manganese, is a key input in the production of steel.

Our export customers are steel producers around the world. In FY2012, most of our contracts were annual or long-term volume contracts with prices largely negotiated on a quarterly or monthly basis.

We have assets in two major resource basins: the Bowen Basin in Central Queensland, Australia, and the Illawarra region of New South Wales, Australia.

Bowen Basin

The Bowen Basin is well positioned to supply the seaborne market because of its high-quality metallurgical coals, which are ideally suited to efficient blast furnace operations, and its geographical proximity to Asian customers.

We also have access to key infrastructure, including a modern, integrated electric rail network and our own coal loading terminal at Hay Point, Mackay. This infrastructure enables us to maximise

throughput and blending of products from multiple mines to optimise the value of our production and satisfy customer requirements.


BHP BILLITON ANNUAL REPORT 2012 | 35

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      1. Metallurgical Coal Customer Sector Group continued Our Bowen Basin mines are owned through a series of joint ventures. We share 50–50 ownership with Mitsubishi Development Pty Ltd in BHP Billiton Mitsubishi Alliance (BMA), which operates the Goonyella Riverside, Broadmeadow, Peak Downs, Saraji,

        Norwich Park (production ceased), Blackwater and Gregory Crinum mines, together with the Hay Point Coal terminal through the Central Queensland Coal Associates (CQCA) joint venture and

        the Gregory joint venture. Our BHP Billiton Mitsui Coal (BMC) Asset operates South Walker Creek and Poitrel mines. BMC is owned

        by BHP Billiton (80 per cent) and Mitsui and Co (20 per cent).

        The reserve lives of our mines range from four years at Gregory Crinum to 40 years at Saraji. Total attributable production in FY2012 was approximately 25.3 Mt compared with 25.7 Mt

        in FY2011. Production in FY2012 was largely constrained by industrial action and severe wet weather. Additionally,


        Information on Metallurgical Coal mining operations


        in April 2012, BMA announced the intention to cease production at Norwich Park mine indefinitely, following a review of the mine’s viability. On 10 September 2012, BMA announced its intention

        to cease production at its Gregory open-cut mine, part of the Gregory Crinum complex, from 10 October 2012.

        Production figures for the Bowen Basin include some energy coal (less than five per cent).

        lllawarra

        We own and operate three underground coal mines in the Illawarra region of New South Wales, which supply metallurgical coal to

        the nearby BlueScope Port Kembla steelworks, and other domestic and export markets. Total production in FY2012 was approximately

        7.9 Mt compared with 6.9 Mt in FY2011. The reserve lives of

        our mines range from four years at West Cliff to 31 years at Appin.

        Production figures for Illawarra include some energy coal (less than 17 per cent).

        The following table contains additional details of our mining operations. The tables should be read in conjunction with the production (see section 2.3.2) and reserves tables (see section 2.13.2).



        Mine Type &


        Mine &

        Means of


        Title, Leases


        Mineralisation

        Facilities, Use

        Location

        Access

        Ownership

        Operator or Options

        History

        Style

        Power Source & Condition

        image

        image

        Metallurgical coal Central Queensland Coal Associates (CQCA) joint venture

        Bowen Basin,

        Public road

        BHP Billiton 50%

        BMA Mining leases,

        Goonyella mine

        All open-cut except

        Queensland

        On-site

        Queensland,

        Coal transported Mitsubishi

        including undeveloped commenced

        Broadmeadow:

        electricity grid

        beneficiation

        Australia Goonyella Riverside,

        by rail to Hay Point and Gladstone ports

        Development 50%

        tenements, expire between 2012–2037, renewable for further

        1971, merged with adjoining Riverside mine

        longwall underground Bituminous coal

        facilities Combined nominal capacity: in excess

        Peak Downs,

        periods as Queensland 1989

        is mined from the

        of 53.5 mtpa

        Saraji, Norwich Park,

        Blackwater and Broadmeadow mines

        Government/ legislation allows Mining is permitted

        to continue under the

        legislation during the renewal application period. Applications have been lodged to renew mining leases expiring in 2012

        Operates as Goonyella Riverside

        Production commenced: Peak Downs 1972

        Saraji 1974 Norwich Park 1979

        Permian Moranbah and Rangal Coal measures

        Products range from premium-quality, low volatile, high vitrinite, hard coking coal to medium volatile hard coking coal, to weak coking

        Hay Point Coal terminal

        Blackwater 1967 coal, and some


        image

        image

        Gregory joint venture

        Broadmeadow (longwall operations) 2005

        medium ash thermal coal as a by-product

        Bowen Basin,

        Public road

        BHP Billiton

        BMA Mining leases,

        Production

        Gregory: open-cut

        Queensland

        On-site

        Queensland,

        Coal transported 50%

        including undeveloped commenced:

        Crinum: longwall

        electricity grid

        beneficiation

        Australia Gregory and Crinum mines

        by rail to Hay Point and Gladstone ports

        Mitsubishi Development 50%

        tenements, expire between 2014–2027, renewable for further

        Gregory 1979 Crinum mine (longwall) 1997

        underground

        Bituminous coal is mined from the

        processing facility Nominal capacity: in excess of 5 mtpa

        periods as Queensland Production at

        Permian German


        image

        BHP Billiton Mitsui Coal Pty Limited

        Government/ legislation allows

        Gregory mine to cease from

        10 October 2012

        Creek Coal measures Product is a high volatile, low ash

        hard coking coal,

        image

        and a medium ash thermal coal

        Bowen Basin,

        Public road

        BHP Billiton 80%

        BMC Mining leases,

        South Walker

        Open-cut

        Queensland

        South Walker

        Queensland,

        Coal transported Mitsui and Co

        including undeveloped Creek

        Bituminous coal

        electricity grid

        Creek coal

        Australia South Walker Creek and

        Poitrel mines

        by rail to

        Hay Point port

        20%

        tenements expire in 2020, renewable for further periods as Queensland Government/ legislation allows

        commenced 1996

        Poitrel commenced 2006

        is mined from the Permian Rangal Coal measures

        Produces a range of coking coal, pulverised coal injection (PCI) coal, and thermal coal products with medium to high phosphorus and ash properties

        beneficiated on-site

        Nominal capacity: in excess

        of 3.5 mtpa Poitrel mine has Red Mountain

        joint venture

        with adjacent Millennium Coal mine to share processing and rail loading facilities

        Nominal capacity: in excess of

        3 mtpa


        image


        36 | BHP BILLITON ANNUAL REPORT 2012

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        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        Information on Metallurgical Coal mining operations continued



        Mine Type &


        Mine &

        Means of


        Title, Leases


        Mineralisation

        Facilities, Use

        Location

        Access

        Ownership

        Operator or Options

        History

        Style

        Power Source & Condition

        Metallurgical coal continued

        image

        image

        Illawarra Coal

        Illawarra, New South Wales, Australia

        Dendrobium,

        Public road

        Coal transported by road or rail

        to BlueScope

        100% BHP Billiton Mining leases expire between 2012–2026, renewable for further periods as NSW

        Production commenced: Appin 1962 (longwall

        Underground Bituminous coal is mined from the

        Permian Illawarra

        New South Wales electricity grid

        2 beneficiation facilities

        Nominal capacity: approximately

        Appin and West

        Steel’s Port

        Government/

        operations 1969) Coal Measures

        9 mtpa

        Cliff mines

        Kembla steelworks

        or Port Kembla for export

        legislation allows Mining is permitted to continue under the

        legislation during

        the application period Applications lodged to renew mining

        leases expiring in

        2012 and 2013

        West Cliff 1976 Dendrobium 2005

        Produces premium-quality hard coking coal and some thermal coal from the Wongawilli

        and Bulli seams


        image


        Development projects

        Bowen Basin Expansions

        In November 2011, approval was given for the development of the Caval Ridge mine project and expansion of the Peak

        Downs mine in the Bowen Basin in Central Queensland, Australia. In response to the challenging external environment, the Group has chosen to delay indefinitely the 2.5 mtpa (100 per cent basis) expansion of Peak Downs that is associated with the Caval Ridge mine development. The 5.5 mtpa (100 per cent basis) Caval Ridge mine remains on schedule to deliver first production in CY2014.

        The Caval Ridge mine will be an open-cut dragline and truck and shovel operation, with coal railed to the BMA Hay Point Coal terminal.

        In March 2011, approval was given for three key metallurgical coal projects located in the Bowen Basin in Central Queensland, Australia. The projects are expected to add 4.9 Mt of annual mine capacity (100 per cent basis) through development of the Daunia Operation and a new mining area at Broadmeadow. In addition,

        11 Mt of annual port capacity (100 per cent basis) will be developed at the Hay Point Coal terminal. These projects are ongoing with first coal expected from the Daunia mine in 2013, completion of the Broadmeadow expansion expected in 2013 and the first shipments from the expanded terminal expected in FY2015.

        IndoMet Coal Project (Indonesia)

        IndoMet Coal comprises seven coal contracts of work (CCoWs) covering a large metallurgical coal resource in Kalimantan, Indonesia, which was discovered by BHP Billiton in the 1990s. Following an assessment of the importance of local participation in developing the project in 2010, we sold a 25 per cent interest in the project

        to a subsidiary of PT Adaro Energy TBK. We retain 75 per cent

        of the project and hold management responsibility for the project.

        Study work is underway to identify development options across our CCoWs and early work on infrastructure development

        has commenced.

        Appin Area 9 Project

        In June 2012, approval was given to invest US$845 million to sustain operations at Illawarra Coal, in southern New South Wales, Australia, by establishing a replacement mining area at Appin mine. The replacement area will have a production capacity of 3.5 mtpa and will sustain Illawarra Coal’s production capacity at 9 mtpa.

        Appin Area 9 will be operational in 2016 and will replace production at the West Cliff mine. The project includes roadway development, new ventilation infrastructure, new and reconfigured conveyors and other mine services.

      2. Energy Coal Customer Sector Group

Our Energy Coal CSG is one of the world’s largest producers and marketers of export energy coal (also known as thermal or steaming coal) and is also a domestic supplier to the electricity generation industry in Australia, South Africa and the United States. Our global portfolio of energy coal assets and our insights into the broader energy market through our sales of other fuels (gas, uranium and oil) provide our business with substantial advantages as a supplier. We generally make our domestic sales under long-term fixed price or cost plus contracts with nearby power stations. We make export sales to power generators and some industrial users in Asia, Europe and the United States, usually under contracts for delivery of a fixed volume of coal. Pricing is index-linked or fixed; where pricing is fixed, financial instruments are used to swap exposure to market index basis.

We operate three assets: a group of mines and associated infrastructure collectively known as BHP Billiton Energy Coal South Africa; our New Mexico Coal operations in the United States; and our New South Wales Energy Coal operations in Australia. We also own a 33.33 per cent share of the Cerrejón Coal Company, which operates a coal mine in Colombia.

BHP Billiton Energy Coal South Africa

BHP Billiton Energy Coal South Africa (BECSA) operates four coal mines being Khutala, Klipspruit, Middelburg and Wolvekrans in

the Witbank region of Mpumalanga province of South Africa, which in FY2012 produced approximately 33 Mt. The reserve lives of our mines range from eight years at Khutala and Klipspruit to 29 years at Middelburg.

In FY2012, BECSA sold approximately 57 per cent of its production to Eskom, the government-owned electricity utility in South Africa and exported the rest via the Richards Bay Coal Terminal (RBCT), in which we own a 22 per cent share.

During FY2012, BECSA entered into an empowerment transaction with a black-owned consortium, which will effectively hold

an eight per cent equity interest in BECSA once the transaction is completed. The shareholders of BECSA have also approved

the implementation of an Employee Share Ownership Plan (ESOP) in which participating employees will hold a beneficial interest of

two per cent equity in BECSA for a vested period. The empowerment transaction and the introduction of the ESOP are expected to be completed in FY2013.


BHP BILLITON ANNUAL REPORT 2012 | 37

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2 Information on the Company continued



2.2.10 Energy Coal Customer Sector Group continued

New Mexico Coal

We own and operate the Navajo mine, located on Navajo Nation land in New Mexico, and the nearby San Juan mine located in the state of New Mexico. Each mine transports its production directly to a nearby power station. The reserve lives of our mines are four years at Navajo mine and six years at San Juan mine, being the life of the current customer contracts. New Mexico Coal produced approximately 9.4 Mt in FY2012.

New South Wales Energy Coal

New South Wales Energy Coal’s operating asset is the Mt Arthur Coal open-cut mine in the Hunter Valley region of New South Wales, which produced approximately 17 Mt in FY2012 and has a reserve life of 45 years. In FY2012, we delivered approximately 10 per cent of Mt Arthur’s production to a local power station and exported

the rest via the port of Newcastle. During FY2012, the RX1 Project achieved first production ahead of schedule. This project is expected to increase run-of-mine thermal coal production by approximately


four mtpa. We are a 35.5 per cent shareholder in Newcastle Coal Infrastructure Group, a jointly controlled entity that is operating the Newcastle Third Port export coal loading facility and currently has

a project in execution (see Development projects below). We also have a 1.75 per cent interest in Port Waratah Coal Services Limited which operates two coal loading facilities at the port of Newcastle.

Cerrejón Coal Company

We have one-third interest in Cerrejón Coal Company, which owns and operates one of the largest open-cut export coal mines in

the world in La Guajira province of Colombia, as well as integrated rail and port facilities through which the majority of production

is exported to European, Middle Eastern, North American and Asian customers. In FY2012, Cerrejón commenced its expansion project (P40), which will increase BHP Billiton’s share of saleable production from 10.7 mtpa to 13.3 mtpa (see Development projects below).

Cerrejón has a current production capacity of 32 mtpa (100 per cent terms) and has a reserve life of 21 years.


Information on Energy Coal mining operations

The following table contains additional details of our mining operations. The table should be read in conjunction with the production (see section 2.3.2) and reserves tables (see section 2.13.2).



Mine Type &


Mine &

Means of


Title, Leases


Mineralisation

Facilities, Use

Location

Access

Ownership

Operator or Options

History

Style

Power Source & Condition

image

image

South Africa Khutala

100 km east of Public road Johannesburg, Domestic coal

100% BHP Billiton BECSA holds a 100% share of Converted

Production commenced

Combination open-cut and

Eskom (national

Crushing plant for energy coal

Gauteng

Province, South Africa

transported by overland conveyor

to Kendal

Mining Right, which

was granted on 11 October 2011

1984

Open-cut operations 1996

Commenced mining

underground

Produces a medium rank bituminous thermal coal

power

supplier) under long-term

Nominal capacity: 18 mtpa

Smaller crusher and wash plant

Power Station


image

image

Middelburg/Wolvekrans

thermal/metallurgical (non-coking) coal for domestic

market 2003

contracts

to beneficiate metallurgical coal Nominal capacity:

0.6 mtpa

20 km southeast of Witbank, Mpumalanga Province, South Africa


image

image

Klipspruit

30 km west of Witbank Mpumalanga Province, South Africa

Public road Export coal transported

to RBCT by rail

Domestic coal transported by conveyor to Duvha Power Station


Public road Export coal transported

to RBCT by rail

100%

Previous JV (84:16) with Xstrata Plc (through Tavistock Collieries Pty Limited) was amended in February 2008


100%

50% of Phola Coal Plant in JV with Anglo Inyosi Coal

BHP Billiton BECSA and Tavistock

are joint holders of 3 Converted Mining

Rights in the previous JV ratio (84:16).

BECSA is the 100% holder of a fourth Converted

Mining Right

All 4 Rights comprise the Middelburg Mine Complex (1)

The Converted Mining Rights were granted during October and December 2011(2)


BHP Billiton BECSA holds a

Converted Mining Right, which

was granted on 11 October 2011

Production commenced 1982

Middelburg Mine Services (MMS)

and Duvha Opencast became one operation in 1995

Douglas-Middelburg Optimisation

project completed in July 2010

During FY2011 the mine was split into Middelburg and Wolvekrans


Production commenced 2003 Expansion project

completed FY2010,

includes 50% share in Phola Coal Plant Expected ROM capacity: 8.0 mtpa at full ramp-up

Open-cut

Produces a medium rank bituminous thermal coal, most of which can be beneficiated for the European or Asian export markets


Open-cut

Produces a medium rank bituminous thermal coal, most of which can be beneficiated for the European or Asian export markets

Eskom under long-term contracts


Eskom, under long-term contracts

Beneficiation facilities: tips and crushing plants, 2 export wash plants, middlings wash plant,

de-stone plant Nominal capacity:

    1. mtpa


      Beneficiation facilities: tip and crushing plant, export wash plant

      Nominal capacity Phola Coal Processing Plant: 16 mtpa


      image

      1. This includes the Wolvekrans and Middelburg collieries and excludes the portion Tavistock obtained as a result of the amendment of the Douglas-Tavistock Joint Venture agreement.

      2. JV agreement has been amended such that upon the Department of Mineral Resources amending the Converted Mining Rights, the mining area will be divided into an area wholly owned and operated by Tavistock and an area wholly owned and operated by BECSA as the new Douglas-Middelburg mine.


38 | BHP BILLITON ANNUAL REPORT 2012

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1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report


Mine Type &


Mine &

Means of


Title, Leases


Mineralisation

Facilities, Use

Location

Access

Ownership

Operator or Options

History

Style

Power Source & Condition

Information on Energy Coal mining operations continued


image

image

Australia Mt Arthur Coal

Approximately Public road

100% BHP Billiton Various mining

Production

Open-cut

Local energy

Beneficiation

125 km from Newcastle,

Domestic coal transported

leases and licences expire 2010–2032

commenced 2002 Produces a medium Government approval rank bituminous

providers

facilities:

coal handling,

New South

Wales, Australia

by conveyor to Bayswater Power Station

Export coal transported by rail to

Newcastle port

Renewal is being sought for expired mining leases

The original approvals permit mining and other activities

to continue during renewal application

permits extraction of up to 36 Mt of

run of mine coal from underground and open-cut operations, with open-cut extraction limited

to 32 mtpa

thermal coal (non-coking)

preparation,

washing plants Nominal capacity: in excess

of 16 mtpa

US

image

image

Navajo

30 km southwest of Farmington, New Mexico, US


image

image

San Juan

25 km west of Farmington, New Mexico, US

Public road

Coal transported by rail to Four Corners Power Plant (FCPP)


Public road

Coal transported by truck and conveyor to San Juan Generating Station (SJGS)

100% BHP Billiton Long-term lease from Navajo Nation continues for as long as coal can be

economically produced and sold in paying quantities


100% BHP Billiton Mining leases from federal and state governments

Leases viable as long as minimum production criteria achieved

Production commenced 1963


Surface mine operations commenced 1973

Development of underground mine to replace open-cut mine approved 2000

Open-cut

Produces a medium rank bituminous thermal coal

(non-coking suitable for the domestic market only)


Underground Produces a medium rank bituminous

thermal coal

(non-coking suitable for the domestic market only)

Four Corners Power Plant


San Juan Generation Station

Stackers and reclaimers used to size and blend coal to contract specifications

Nominal capacity:

7.4 mtpa


Coal sized and blended to contract specifications using stockpiles

Nominal capacity:

5.6 mtpa


image

Colombia Cerrejón Coal Company

image

La Guajira

Public road

BHP Billiton

Cerrejón Coal Mining leases

Original mine began

Open-cut

Local

Beneficiation

province, Colombia

Coal exported by rail to Puerto Bolivar

33.33%

Anglo American 33.33%

Xstrata 33.33%

Company

expire 2034

producing in 1976 BHP Billiton interest acquired in 2000

Produces a medium rank bituminous thermal coal

(non-coking, suitable for the export market)

Colombian power system

facilities: crushing plant with capacity of

32 mtpa and washing plant Nominal capacity:

3 mtpa


image


Development projects

Cerrejón Coal P40 Project

On 18 August 2011, we announced a US$437 million (BHP Billiton share) investment in the expansion of Cerrejón Coal, known as

the P40 Project, which will enable Cerrejón Coal’s saleable thermal coal production to increase by 8.0 mtpa to approximately 40 mtpa. We have a one-third interest in Cerrejón Coal. The expansion project is expected to increase our share of saleable production from 10.7 mtpa to 13.3 mtpa. Construction commenced in CY2011 with completion expected in CY2013. The project scope includes

a second berth and dual quadrant ship loader at Cerrejón’s 100 per cent owned and operated Puerto Bolivar, along with

necessary mine, rail and associated supply chain infrastructure.

Newcastle Port Third Phase Expansion

On 31 August 2011, we announced a US$367 million (BHP Billiton share) investment in the third stage development of the Newcastle Coal Infrastructure Group’s coal handling facility in Newcastle,

Australia. The port expansion project will increase total capacity at the coal terminal from 53 mtpa to 66 mtpa. This will increase New South Wales Energy Coal’s allocation by a further 4.6 mtpa to 19.2 mtpa. First coal is scheduled to occur in FY2014, with the terminal expected to operate at full capacity within the following 12 months.


BHP BILLITON ANNUAL REPORT 2012 | 39

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2 Information on the Company continued



    1. Production

      1. Petroleum

        The table below details Petroleum‘s historical net crude oil and condensate, natural gas and natural gas liquids production, primarily by geographic segment, for each of the three years ended 30 June 2012, 2011 and 2010. We have shown volumes of marketable production after deduction of applicable royalties, fuel and flare. We have included in the table average production costs per unit of production and average sales prices for oil and condensate and natural gas for each of those periods.

        image

        BHP Billiton Group share of production Year ended 30 June


        2012

        2011

        2010

        Production volumes




        Crude oil and condensate (‘000 of barrels)




        Australia

        31,145

        40,447

        31,540

        United States

        30,824

        30,157

        41,522

        Other

        9,232

        9,987

        11,325

        Total crude oil and condensate

        71,201

        80,591

        84,387

        Natural gas (billion cubic feet)




        Australia

        249.97

        274.74

        259.65

        United States

        456.69

        49.09

        17.68

        Other

        115.60

        81.23

        91.24

        Total natural gas

        822.26

        405.06

        368.57

        Natural Gas Liquids (1) (‘000 of barrels)




        Australia

        7,943

        7,962

        8,652

        United States

        5,744

        1,980

        2,545

        Other

        398

        1,341

        1,552

        Total NGL (1)

        14,085

        11,283

        12,749

        Total petroleum products production (million barrels of oil equivalent) (2)




        Australia

        80.75

        94.20

        83.47

        United States

        112.69

        40.32

        47.01

        Other

        28.90

        24.86

        28.08

        Total petroleum products production (million barrels of oil equivalent) (2)

        222.34

        159.38

        158.56

        Average sales price




        Crude oil and condensate (US$ per barrel)




        Australia

        114.33

        96.32

        74.12

        United States

        106.22

        90.01

        71.55

        Other

        113.26

        90.69

        75.57

        Total crude oil and condensate

        110.66

        93.29

        73.05

        Natural gas (US$ per thousand cubic feet)




        Australia

        4.62

        4.21

        3.52

        United States

        2.82

        3.48

        4.80

        Other

        4.13

        3.92

        3.05

        Total natural gas

        3.40

        4.00

        3.43

        Natural Gas Liquids (US$ per barrel)




        Australia

        61.61

        58.05

        48.20

        United States

        45.72

        49.79

        39.51

        Other

        55.06

        59.54

        49.40

        Total NGL

        54.85

        56.77

        46.47

        Total average production cost (US$ per barrel of oil equivalent) (3)




        Australia

        7.95

        5.75

        5.59

        United States

        5.91

        6.45

        5.62

        Other

        7.84

        8.39

        7.48

        Total average production cost (US$ per barrel of oil equivalent) (3)

        6.90

        6.34

        5.93

        1. LPG and ethane are reported as Natural Gas Liquids (NGL).

        2. Total barrels of oil equivalent (boe) conversion is based on the following: 6,000 scf of natural gas equals 1 boe.

        3. Average production costs include direct and indirect costs relating to the production of hydrocarbons and the foreign exchange effect of translating local currency denominated costs into US dollars but excludes ad valorem and severance taxes.


        40 | BHP BILLITON ANNUAL REPORT 2012

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        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

      2. Minerals

The table below details our mineral and derivative product production for all CSGs except Petroleum for the three years ended 30 June 2012, 2011 and 2010. Production shows our share unless otherwise stated. For discussion of minerals pricing during the past three years, refer

to section 3.4.1.

image

BHP Billiton BHP Billiton Group share of production


%

2012

2011

2010

Aluminium





Alumina





Production (‘000 tonnes)





Worsley, Australia

86.0

2,917

2,902

3,054

Paranam, Suriname (1)

45.0

78

Alumar, Brazil

36.0

1,235

1,108

709

Total alumina


4,152

4,010

3,841

Aluminium





Production (‘000 tonnes)





Hillside, South Africa

100.0

621

711

710

Bayside, South Africa

100.0

98

97

98

Alumar, Brazil

40.0

170

174

174

Mozal, Mozambique

47.0

264

264

259

Total aluminium


1,153

1,246

1,241

Base Metals (2)





Copper





Payable metal in concentrate (‘000 tonnes)





Escondida, Chile

57.5

333.8

390.5

448.1

Antamina, Peru

33.8

127.0

97.8

98.6

Total copper concentrate


460.8

488.3

546.7

Cathode (‘000 tonnes)





Escondida, Chile

57.5

172.0

179.1

174.2

Pampa Norte, Chile (4)

100.0

263.7

272.2

244.8

Pinto Valley, United States (3)

100.0

5.4

5.7

6.2

Olympic Dam, Australia

100.0

192.6

194.1

103.3

Total copper cathode


633.7

651.1

528.5

Total copper concentrate and cathode


1,094.5

1,139.4

1,075.2

Lead





Payable metal in concentrate (‘000 tonnes)





Cannington, Australia

100.0

239.1

243.4

245.4

Antamina, Peru

33.8

8

1.2

3.0

Total lead


239.9

244.6

248.4

Zinc





Payable metal in concentrate (‘000 tonnes)





Cannington, Australia

100.0

54.7

60.7

62.7

Antamina, Peru

33.8

57.5

91.5

135.6

Total zinc


112.2

152.2

198.3

Gold





Payable metal in concentrate (‘000 ounces)





Escondida, Chile

57.5

50.9

84.7

76.4

Olympic Dam, Australia (refined gold)

100.0

117.8

111.4

65.5

Total gold


168.7

196.1

141.9

Group interest Year ended 30 June


BHP BILLITON ANNUAL REPORT 2012 | 41

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2.3.2 Minerals continued


BHP Billiton BHP Billiton Group share of production


%

2012

2011

2010

Base Metals (2) continued





Silver





Payable metal in concentrate (‘000 ounces)





Escondida, Chile

57.5

1,921

2,849

2,874

Antamina, Peru

33.8

4,272

3,600

4,712

Cannington, Australia

100.0

34,208

35,225

37,276

Olympic Dam, Australia (refined silver)

100.0

907

982

500

Total silver


41,308

42,656

45,362

Uranium oxide





Payable metal in concentrate (tonnes)





Olympic Dam, Australia

100.0

3,885

4,045

2,279

Total uranium oxide


3,885

4,045

2,279

Molybdenum





Payable metal in concentrate (tonnes)





Antamina, Peru

33.8

2,346

1,445

813

Total molybdenum


2,346

1,445

813

Diamonds and Specialty Products





Diamonds





Production (‘000 carats)





EKATITM, Canada

80.0

1,784

2,506

3,050

Total diamonds


1,784

2,506

3,050

Titanium minerals (5)





Production (‘000 tonnes)





Titanium slag





Richards Bay Minerals, South Africa (6)

37.8

384

366

317

Rutile





Richards Bay Minerals, South Africa (6)

37.8

38

32

34

Zircon





Richards Bay Minerals, South Africa (6)

37.8

100

83

83

Total titanium minerals


522

481

434

Stainless Steel Materials





Nickel





Production (‘000 tonnes)





Cerro Matoso, Colombia

99.9

48.9

40.0

49.6

Yabulu, Australia (7)

100.0

2.8

Nickel West, Australia

100.0

109.0

112.7

123.8

Total nickel


157.9

152.7

176.2

Iron Ore (8)





Production (‘000 tonnes)





Newman, Australia (9)

85.0

51,326

45,245

32,097

Goldsworthy joint venture, Australia

85.0

768

1,198

1,688

Area C joint venture, Australia

85.0

42,425

39,794

38,687

Yandi joint venture, Australia

85.0

53,536

36,460

41,396

Samarco, Brazil

50.0

11,423

11,709

11,094

Total iron ore


159,478

134,406

124,962

Group interest Year ended 30 June


42 | BHP BILLITON ANNUAL REPORT 2012

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1

Key information


2

Information on the Company


3 Operating and financial review and prospects


4 Board of Directors and

Group Management Committee


5

Corporate Governance Statement


6

Remuneration Report

2.3.2 Minerals continued

image

BHP Billiton BHP Billiton Group share of production


%

2012

2011

2010

Manganese





Manganese ores





Saleable production (‘000 tonnes)





Hotazel Manganese Mines, South Africa (10)

44.4

3,625

3,007

2,718

GEMCO, Australia (10)

60.0

4,306

4,086

3,406

Total manganese ores


7,931

7,093

6,124

Manganese alloys





Saleable production (‘000 tonnes)





Metalloys, South Africa (10)(11)

60.0

404

486

364

TEMCO, Australia (10)

60.0

198

267

219

Total manganese alloys


602

753

583

Metallurgical Coal (12)





Production (‘000 tonnes)





Blackwater, Australia

50.0

4,435

4,589

5,733

Goonyella Riverside, Australia (13)

50.0

5,003

5,359

6,668

Peak Downs, Australia

50.0

3,534

3,402

4,332

Saraji, Australia

50.0

3,053

2,779

3,402

Norwich Park, Australia

50.0

1,175

1,055

1,870

Gregory Joint Venture, Australia (14)

50.0

1,411

2,717

2,398

Total BMA, Australia


18,611

19,901

24,403

South Walker Creek, Australia


4,081

3,134

3,609

Poitrel, Australia


2,612

2,759

2,834

Total BHP Billiton Mitsui Coal, Australia (15)

80.0

6,693

5,893

6,443

Illawarra, Australia

100.0

7,926

6,884

6,535

Total metallurgical coal


33,230

32,678

37,381

Energy Coal





Production (‘000 tonnes)





Navajo, United States

100.0

7,004

7,472

7,465

San Juan, United States

100.0

2,408

4,140

6,013

Total New Mexico


9,412

11,612

13,478

Middelburg/Wolvekrans, South Africa (16)

100.0

14,848

14,328

14,703

Khutala, South Africa

100.0

10,863

12,928

10,868

Klipspruit, South Africa

100.0

7,568

7,072

4,887

Total BECSA

100.0

33,279

34,328

30,459

Mt Arthur Coal, Australia

100.0

16,757

13,671

12,039

Cerrejón Coal Company, Colombia

33.3

11,663

9,889

10,155

Total energy coal


71,111

69,500

66,131

Group interest Year ended 30 June



  1. Suriname was sold effective 31 July 2009.

  2. Metal production is reported on the basis of payable metal.

  3. The Pinto Valley mining operations were placed on care and maintenance in January 2009, and continue to produce copper cathode through sulphide leaching. Sulphide mining and milling operations will recommence in FY2013.

  4. Includes Cerro Colorado and Spence.

  5. Data was sourced from the TZ Minerals International Pty Ltd Mineral Sands Annual Review 2011 and amounts represent production for the preceding year ended 31 December.

  6. On 1 February 2012, we announced we had exercised an option to sell our 37.8 per cent non-operated interest in Richards Bay Minerals to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we announced the sale was complete.

  7. Yabulu was sold effective 31 July 2009.

  8. Iron ore production is reported on a wet tonnes basis.

  9. Newman includes Mt Newman Joint Venture and Jimblebar.

  10. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 60 per cent, except Hotazel Manganese Mines, which is 44.4 per cent (FY2011:

    44.4 per cent; FY2010: 44.4 per cent).

  11. Production includes Medium Carbon Ferro Manganese.

  12. Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

  13. Goonyella Riverside includes the Broadmeadow underground mine.

  14. BMA intends to cease production at the Gregory open-cut mine from 10 October 2012.

  15. Shown on 100 per cent basis. BHP Billiton interest in saleable production is 80 per cent (FY2011: 80 per cent; FY2010: 80 per cent).

  16. Wolvekrans was previously known as Douglas mine.


BHP BILLITON ANNUAL REPORT 2012 | 43

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2 Information on the Company continued



    1. Marketing

      BHP Billiton’s Marketing network manages the Group’s revenue line and is responsible for:

      • selling our products and for the purchase of all major raw materials;

      • the supply chain for our various products, from assets to market, and also for raw materials, from suppliers to our assets;

      • managing credit and price risk associated with the revenue line;

      • achieving market clearing prices for the Group’s products;

      • defining our view of long-term market fundamentals.

      Our responsibilities require an active presence in the various commodities markets and the global freight market.

      Our marketing activities are centralised in Singapore; Houston, United States; and Antwerp, Belgium. Our Aluminium, Energy Coal, Iron Ore, Metallurgical Coal, Manganese, Base Metals, Stainless Steel Materials, Freight and Uranium marketing teams are headquartered in Singapore. Our Petroleum and Diamonds

      marketing teams operate from Houston and Antwerp, respectively.

      These three marketing offices incorporate all the functions required to manage product marketing and distribution – from the point

      of production to final customer delivery. In addition, we have marketers located in 12 regional offices around the world.

      We have a centralised ocean freight business that manages our in-house freight requirements. The primary purpose of the freight business is to create a competitive advantage for our shipments through the procurement and operation of quality, cost-effective shipping. From time to time, we carry complementary cargoes for external parties to optimise profitability.


    2. Minerals exploration

      Our minerals exploration program is integral to our growth strategy and is focused on discovering and acquiring operating interests

      in mineral deposits with the potential to support large, long-life, low-cost, expandable upstream assets, diversified by commodity, geography and market.

      Our greenfield exploration targets, focused on copper, nickel,

      iron ore and potash, are organised from our three principal offices in Santiago, Chile; Perth, Australia; and Singapore. Our exploration activities include opportunity identification, application for

      and acquisition of mineral title, early reconnaissance operations and multi-million dollar delineation drilling programs.

      In addition to our activities focused on finding new world-class deposits, several of our CSGs undertake brownfield exploration, principally aimed at delineating and categorising mineral deposits near existing operations, and advancing projects through the development pipeline.

      Our expenditure on minerals exploration over the last three years is as follows.


    3. Group Resource and Business Optimisation

      Group Resource and Business Optimisation (RBO) provides governance and technical leadership for resource development and Ore Reserve reporting. RBO’s 66 professionals are focused on ensuring optimal value recovery from our resources. The team includes functional experts in mineral resource evaluation, brownfields exploration, planning, research and development, work management, production processes, mine engineering

      and mineral process engineering.

      RBO engages directly with assets to deliver guidance and assess compliance in resource development and Ore Reserve reporting. It provides the Group Management Committee with assurance reports and portfolio analysis. RBO also provides functional expertise to audits and to investment review programs conducted by other Group Functions.

      RBO’s accountabilities include governance for all resource and reserve estimation and Ore Reserve reporting.


    4. Government regulations

Government regulations touch all aspects of our operations. However, the geographical diversity of our operations reduces the risk that any one set of government regulations would have a material effect on our business, taken as a whole.

The ability to extract minerals, oil and natural gas is fundamental to our business. In most jurisdictions, the rights to undeveloped mineral or petroleum deposits are owned by the state. Accordingly, we rely upon the rights granted to us by the government that owns the mineral, oil or natural gas. These rights usually take the form of a lease or licence, which gives us the right to access the land

and extract the product. The terms of the lease or licence, including the time period for which it is effective, are specific to the laws

of the relevant government. Generally, we own the product we extract and royalties or similar taxes are payable to the government. Some of our operations, such as our oil and gas operations in Trinidad and Tobago and Algeria, are subject to production sharing contracts under which both we, as the contractor, and the government are entitled to a share of the production. Under such production sharing contracts, the contractor is entitled to recover its exploration and production costs from the government’s share of production.

Related to the ability to extract is the ability to process the minerals, oil or natural gas. Again, we rely upon the relevant government

to grant the rights necessary to transport and treat the extracted material in order to ready it for sale.

Underlying our business of extracting and processing natural resources is the ability to explore for those orebodies. Typically, the rights to explore for minerals, oil and natural gas are granted to us by the government that owns those natural resources that we wish to explore. Usually, the right to explore carries with it the obligation

to spend a defined amount of money on the exploration or to

Year ended 30 June

2012

US$M

2011

US$M

2010

US$M

Greenfield exploration

324

207

126

Brownfield exploration

773

476

390

Total minerals exploration

1,097

683

516

undertake particular exploration activities.

Governments also impose obligations on us in respect of environmental protection, land rehabilitation, occupational health and safety, and native land title with which we must comply in order

to continue to enjoy the right to conduct our operations within that

jurisdiction. These obligations often require us to make substantial expenditures to minimise or remediate the environmental impact of our operations, to ensure the safety of our employees and contractors and the like. For further information on these types

of obligations, refer to section 2.8 of this Report.

Of particular note are the following regulatory regimes:


44 | BHP BILLITON ANNUAL REPORT 2012

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      1. Uranium production in Australia

        To mine, process, transport and sell uranium from within Australia, we are required to hold possession and export permissions,

        which are also subject to regulation by the Australian Government or bodies that report to the Australian Government.

        To possess ‘nuclear material’, such as uranium, in Australia,

        a Permit to Possess Nuclear Materials (Possession Permit) must be held pursuant to the Australian Nuclear Non-Proliferation (Safeguards) Act 1987 (Non-Proliferation Act). A Possession Permit is issued by the Australian Safeguards and Non-Proliferation Office, an office established under the Non-Proliferation Act, which administers Australia’s domestic nuclear safeguards requirements and reports

        to the Australian Government.

        To export uranium from Australia, a Permit to Export Natural Uranium (Export Permit) must be held pursuant to the Australian Customs (Prohibited Exports) Regulations 1958. The Export Permit is issued by the Minister for Resources and Energy.

        A special transport permit is required under the Non-Proliferation Act by a party that transports nuclear material from one specified location to another specified location. As we engage service providers to transport uranium, those service providers are required to hold a special transport permit.

      2. Exchange controls and shareholding limits

        BHP Billiton Plc

        There are no laws or regulations currently in force in the

        United Kingdom that restrict the export or import of capital or the remittance of dividends to non-resident holders of BHP Billiton Plc’s shares, although the Group does operate in some other jurisdictions where remittances of funds could be affected as they are subject

        to exchange control approvals. There are certain sanctions adopted by the UK Government which implement resolutions of the Security Council of the United Nations and sanctions imposed by the European Union (EU) against certain countries, entities and individuals and may restrict the export or import of capital or the remittance of dividends to certain non-resident holders of BHP Billiton Plc’s shares. Any enforcement of financial sanctions by the UK Government would be initiated by HM Treasury. Such sanctions may be in force from time to time and include those against: (i) certain entities and/or individuals associated with Belarus, Cote d’Ivoire, The Democratic People’s Republic of Korea (North Korea), the Democratic Republic of Congo, Egypt, Eritrea, the Republic of Guinea, the Republic

        of Guinea-Bissau, Lebanon, Liberia, Libya, Iran, Somalia, Sudan, Syria, Tunisia, Zimbabwe and the previous regimes of Iraq and Yugoslavia(1); (ii) individuals indicted by the International Criminal Tribunal for the former Yugoslavia; and (iii) entities and individuals linked with the Taliban, Al-Qaeda and other terrorist organisations.

        There are no restrictions under BHP Billiton Plc’s Articles of Association or (subject to the effect of any sanctions) under English law that limit the right of non-resident or foreign owners to hold or vote

        BHP Billiton Plc’s shares.

        There are certain restrictions on shareholding levels under BHP Billiton Plc’s Articles of Association described under the heading ‘BHP Billiton Limited’ below.

        BHP Billiton Limited

        Under the Australian Banking (Foreign Exchange) Regulations 1959, the Reserve Bank of Australia may impose restrictions on certain financial transactions and require the consent of the Reserve Bank of Australia for the movement of funds into and out of Australia.

        Based on our searches, restrictions currently apply if funds are to be paid to or received from specified persons and individuals associated with Syria, specified government and military officials and supporters of the government of Libya, specified supporters of the former Government of the Federal Republic of Yugoslavia, specified ministers and senior officials of the Government of

        Zimbabwe, certain specified entities associated with the Democratic People’s Republic of Korea (North Korea), and certain Iranian organisations and ministers. In addition, from time to time the United Nations Security Council and the Australian Government

        impose international sanctions on certain countries and organisations.


        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        The countries and organisations that are currently subject

        to United Nations sanctions are certain individuals or entities linked with the Taliban, Al-Qaeda and associated individuals

        and entities, other designated individuals and entities associated with terrorism, certain entities and individuals associated with the Democratic Republic of Congo, Cote d’Ivoire, the Democratic People’s Republic of Korea (North Korea), Eritrea, Guinea-Bissau,

        Iran, Iraq, Lebanon, Liberia, Libya, Sudan and Somalia. The countries currently subject to the Australian Government’s autonomous sanctions are the Democratic People’s Republic of Korea (North Korea), Fiji, the former Federal Republic of Yugoslavia, Iran, Libya, Syria and Zimbabwe. The controls impose certain approval and reporting requirements on transactions involving such countries, entities and individuals and/or assets controlled or owned by

        them. Transfers into or out of Australia of amounts greater than A$10,000 in any currency are also subject to reporting requirements.

        Remittances of any dividends, interest or other payments by

        BHP Billiton Limited to non-resident holders of BHP Billiton Limited’s securities are not restricted by exchange controls or other limitations, save that in certain circumstances, BHP Billiton may be required

        to withhold Australian taxes.

        There are no limitations, either under the laws of Australia

        or under the Constitution of BHP Billiton Limited, on the right of non-residents to hold or vote BHP Billiton Limited ordinary shares other than as set out below.

        The Australian Foreign Acquisitions and Takeovers Act 1975 (the FATA) restricts certain acquisitions of interests in shares in BHP Billiton. Generally, under the FATA, the prior approval of the Australian Treasurer must be obtained for proposals by a foreign person (either alone or together with associates) to acquire control of 15 per cent or more of the voting power or issued shares in BHP Billiton Limited.

        The FATA also empowers the Treasurer to make certain orders prohibiting acquisitions by foreign persons in BHP Billiton Limited (and requiring divestiture if the acquisition has occurred) where he considers the acquisition to be contrary to the national interest

        and the 15 per cent threshold referred to above would be exceeded as a result. Such orders may also be made in respect of acquisitions by foreign persons where two or more foreign persons (and their associates) in aggregate already control 40 per cent or more of the issued shares or voting power in BHP Billiton Limited.

        There are certain other statutory restrictions, and restrictions under BHP Billiton Limited’s Constitution and BHP Billiton Plc’s Articles

        of Association, that apply generally to acquisitions of shares in

        BHP Billiton (i.e. the restrictions are not targeted at foreign persons only). These include restrictions on a person (and associates) breaching a voting power threshold of:

        • 20 per cent in relation to BHP Billiton Limited on a ‘stand-alone’ basis, i.e. calculated as if there were no special voting share and only counting BHP Billiton Limited’s ordinary shares.

        • 30 per cent of BHP Billiton Plc. This is the threshold for a mandatory offer under Rule 9 of the UK takeover code and this threshold applies to all voting rights of BHP Billiton Plc (therefore including voting rights attached to the BHP Billiton Plc Special Voting Share).

        • 30 per cent in relation to BHP Billiton Plc on a ‘stand-alone’ basis, i.e. calculated as if there were no special voting share and only counting BHP Billiton Plc’s ordinary shares.

        • 20 per cent in relation to the BHP Billiton Group, calculated having regard to all the voting power on a joint electorate basis,

            1. calculated on the aggregate of BHP Billiton Limited’s and BHP Billiton Plc’s ordinary shares.

              Under BHP Billiton Limited’s Constitution and BHP Billiton Plc’s Articles of Association, sanctions for breach of any of these thresholds, other than by means of certain ‘permitted acquisitions’, include withholding of dividends, voting restrictions and compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.


              1. As at 14 May 2012, the financial sanctions on the Burmese regime (Myanmar) were suspended until 30 April 2013.


          BHP BILLITON ANNUAL REPORT 2012 | 45

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          2 Information on the Company continued



    1. Sustainability

      Our BHP Billiton Charter value of Sustainability reflects our priority of putting health and safety first, being environmentally responsible and supporting our communities.

      Our ability to operate globally is heavily dependent on gaining access to natural resources and maintaining our licence to operate. Sustainable development is core to our business strategy; we integrate health, safety, environmental, social and economic factors into our decision-making. We report the sustainability

      dimensions of what we do in detail in the Sustainability Report 2012. The sustainability dimensions that we report on include the health and safety of our people; governance and risk management processes; how we are socially responsible and contributing

      to improved standards of living and self-sustaining communities; resource conservation and biodiversity; and how we ensure

      the broader economic contributions of our operations benefit the regions in which we operate.

      The information contained in this section covers assets that have been wholly owned and operated by BHP Billiton or which have been operated by BHP Billiton in a joint venture operation (controlled assets) for FY2012. In March 2011, we acquired the

      US Fayetteville shale resource from Chesapeake Energy Corporation and subsequently acquired Petrohawk Energy Corporation in August 2011, which now form our Petroleum Onshore US business. Under a transition services agreement, Chesapeake Energy Corporation continued to operate Fayetteville on our behalf

      until 1 April 2012. Accordingly, health, safety, environment and community (HSEC) data relating to our Onshore US business has not been collected in BHP Billiton systems for the FY2012 period and all information contained in this section excludes data from our Onshore US business.

      Additional information relating to our sustainability performance for FY2012 is available in the Sustainability Report 2012 and is available online at www.bhpbilliton.com.

      1. Our sustainability governance structure

        The Sustainability Committee assists the Board in oversight of HSEC matters. This includes overseeing areas relating to HSEC risk, compliance with applicable legal and regulatory requirements, and overall Group HSEC performance.

        More specifically, management is accountable for the implementation of sustainability-related processes and performance to comply with our suite of HSEC Group Level Documents (GLDs).

        GLDs contain minimum mandatory performance requirements and performance controls and are the foundation for developing and implementing management systems at all our operations. Regular internal audits are conducted to test compliance with the requirements of the HSEC GLDs. Audit results are used by management to create action plans where the businesses have not yet achieved full compliance with the GLD requirements.

        Key findings are reported to senior management, and summary reports are considered by the Sustainability Committee of the Board and, where appropriate, by the Risk and Audit Committee of the Board.

      2. Assessing risks and establishing controls

        We mandate criteria to identify risks we consider material to our business and take into consideration the potential health, safety, environmental, social, reputational, legal and financial impacts.

        The severity of any particular risk is assessed according to a matrix that describes the degree of harm, injury or loss from the most severe impact associated with a specific risk,

        assuming reasonable effectiveness of controls. The objectives of the risk assessment process are to understand the nature and tolerance of the material risks for the Group and ensure they are managed through the verification of critical controls.


        Information relating to the material risks for the Group, including sustainability risks is available in section 1.5 of this Report. Our risk management processes are consistent with the hierarchy of controls described in Article 6 of International Labour Organization (ILO) Convention 176 – Safety and Health in Mines, 1995.

      3. Identifying our sustainability issues

        We identified the sustainability issues included in this Report and the Sustainability Report 2012 through a three-step materiality process. Step one of the process included identifying issues by reviewing our internal risk registers, enquiries from our shareholders and investors, daily print media coverage and an independent review of issues raised by non-government organisations (NGOs) and global electronic and print media. Step two involved rating the significance of these issues to our stakeholders and the potential impact on our business as low, medium or high. The third step

        was to review the issues and seek feedback from key stakeholders. A number of material issues are discussed in the following sections:

        • Keeping our people safe and healthy

        • Employing and developing our people

        • Reducing our climate change impacts

        • Managing water

        • Managing land and enhancing biodiversity

        • Ensuring meaningful engagement with our stakeholders

        • Making a positive contribution to society

        • Understanding and managing our human rights impact

        • Reporting transparently and behaving ethically.

      4. Keeping our people safe and healthy

        The safety and health of our people is core to every aspect of

        our business. Having our people return home safe and well at the end of each day, and enabling them to end their working life fit and healthy is central to everything we do. This is reflected in the

        processes and controls we have in place throughout our organisation.

        Our safety and health performance

        The key safety and health issues that we faced in FY2012 related to adherence to isolation and permit-to-work procedures, and to reducing potential occupational health exposures, particularly

        to carcinogens and airborne contaminants, noise-induced hearing loss, musculoskeletal injuries and fatigue.

        The FY2012 total recordable injury frequency (TRIF) performance of 4.7 per million hours worked improved by six per cent compared with FY2011 (5.0), and while we have not met our TRIF target

        of 3.7, it has reduced by 36 per cent since the FY2007 base year. Although our injury rates and statistical measures showed a steady improvement, we still had three fatalities in FY2012. Each of these incidents was thoroughly investigated. We reviewed and updated our Fatal Risk Controls GLD to provide further clarity about controls associated with isolation and permit to work, including expectations around change management and ensuring those involved in the work fully understand the hazards and associated controls.

        In FY2012, the incidence of occupational illness was 43.7 cases per 10,000 employees, an increase of 7.4 per cent compared

        with 40.7 cases per 10,000 employees in FY2011.(1) However, since 2007, we have achieved a 22 per cent reduction in the incidence of occupational illness against a target of 30 per cent. Forty-one per cent of these cases were due to noise-induced hearing loss and 44 per cent due to musculoskeletal illness. The increased number of cases led our operations to increase their focus on control effectiveness for these hazards.

        We focus on improving our workplaces, using the recognised hierarchy of controls and work practices to minimise the need for personal protective equipment (PPE), which we provide to all employees and contractors as required.


        1. In FY2012, internal audits identified that some illnesses had not been recorded as required in FY2011. Consequently, the number of employee illnesses for FY2011 increased and has been adjusted. Employee data is based on head count as at 30 June 2012.


46 | BHP BILLITON ANNUAL REPORT 2012

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      1. Keeping our people safe and healthy continued

        Safely undertaking deepwater drilling

        Deepwater oil and gas exploration is an important aspect of

        our worldwide business. Our team of skilled drilling professionals, comprehensive processes and systems are fundamental to ensuring our deepwater drilling operations are conducted in a safe manner that comply with the United States Bureau of Ocean Energy Management, Regulation and Enforcement regulations and our own strict requirements. Following the oil spill from BP’s Macondo well in the Gulf of Mexico in April 2010, we reviewed our deepwater drilling safety standards to assess the effectiveness of our existing risk management controls, which were tested and improved

        where required.

        Managing aviation risk

        Aviation is a significant material safety risk. We move a substantial number of people by chartered aircraft each year. Our Group aviation safety assurance process continues to use the Flight Safety Foundation Basic Aviation Risk Standard to satisfy the minimum technical requirements for contracted aviation activities. In FY2012, through our Aviation GLD, we enhanced the operational review process undertaken by our aviation specialists to assess the effectiveness of aviation critical controls. The Aviation GLD was also updated to provide greater emphasis on operational readiness and airfield infrastructure. We engage with our aviation specialists to ensure we maintain the necessary balance between audit and approval of aircraft operations and the risk-based operational review in the field.

        Occupational health exposures

        Our priority is to control exposures at their source. Health risks faced by our people include fatigue and other causes of impaired fitness for work, as well as occupational exposure to noise, silica, manganese, diesel exhaust particulate, fluorides, coal tar pitch, nickel and sulphuric acid mist. Our Health GLD requires that an exposure risk profile be established and maintained for our employees and contractors and that relevant exposure controls be identified and implemented. If the potential exposure to harmful agents exceeds 50 per cent of the occupational exposure limit (OEL), medical surveillance is implemented to identify potential illness

        or health effects at an early stage and to provide feedback as to whether the exposure controls we have in place are functioning as designed. We have seen a 41 per cent reduction since FY2009 in the number of carcinogen exposures to our employees that potentially exceed the OEL. This does not take into account

        the protection afforded by PPE.

        Serious disease

        BHP Billiton operations with a high exposure to serious diseases, such as HIV/AIDS, malaria and tuberculosis, have education, training and counselling programs in place to assist employees. We also offer prevention and risk-control programs to employees and,

        where appropriate, to employees’ families and local communities.

        We help manage the impact of disease and protect the viability of our operations by assisting in caring for our employees and the wellbeing of our host communities.

      2. Employing and developing our people

        Attracting, employing and developing people with exceptional skills, who share our values, provides us with a competitive advantage and is critical to our long-term sustainability. Each individual brings unique skills, experience and perspectives, and we recognise that we are strengthened by diversity. We are committed to providing

        a work environment in which everyone is treated fairly and

        with respect and has the opportunity to maximise their potential. We value promoting from within and seek to build a high-performance organisation through fair reward and recognition.

        Recruitment is managed on a local basis by each Customer Sector Group, Minerals Exploration, Marketing and Group Function.

        Employment is offered and provided based on merit. Every person applying for a job is evaluated according to their job-related skills, qualifications, abilities, aptitudes and alignment with

        Our BHP Billiton Charter values. We acknowledge that targeted

        affirmative action may be required to address historical imbalances and past discrimination through programs such as Indigenous employment and training and Black Economic Empowerment.


        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        Additional information relating to diversity, and employee policies and involvement at BHP Billiton is available in sections 5.17 and 7.8 of this Report and in the Sustainability Report 2012 available online at www.bhpbilliton.com.

      3. Reducing our climate change impacts

As a global organisation operating in an energy-intensive industry, we are actively managing risks associated with climate change, which are discussed in section 1.5 of this Report.

Potential impacts of climate change on our organisation

In the medium and long-term, we are likely to see changes in the cost structures of our greenhouse gas (GHG) intensive assets as a result of regulatory requirements in the countries where we operate. This may also have implications for our suppliers and customers. Inconsistency of regulations, particularly between

developed and developing countries, could affect the investment attractiveness of assets in different jurisdictions.

Potential physical impacts of climate change on our operations may include changes in precipitation patterns, increased storm intensities and higher average temperature levels, which may adversely affect the productivity and financial performance

of our operations.

Reducing energy intensity and greenhouse gas emissions We strive to continually improve energy and GHG management. Our operations with material emissions must implement and

maintain Energy and GHG Management Plans. These plans include a five-year forecast and identification, evaluation and implementation of energy-efficiency and GHG-reduction projects.

Emissions abatement and energy savings are key considerations in our decision-making, and we undertake transparent public reporting of our emissions. In FY2012, our carbon-based energy intensity and GHG emissions intensity were lower than the FY2006

baseline, by 15 per cent and 16 per cent, resulting in the successful achievement of our FY2012 target of 13 per cent and six per cent respectively. This result was primarily driven by the use of hydroelectric power to supply 98 per cent of the electricity needs at our Mozal aluminium smelter in Mozambique. The result also reflects successful implementation of energy efficiency projects and reductions of fugitive methane emissions.

We work collaboratively with customers, communities and employees to reduce emissions and support internal emissions reduction projects. To this end, we committed to spending US$300 million

over the 2008 to 2012 period to support the implementation of energy efficient and low GHG emission technologies. We exceeded our commitment, having spent US$430 million on projects, which are in various stages of implementation. While this commitment was realised in FY2012, we remain focused on establishing projects that reduce our energy consumption and carbon emissions footprint.

Future greenhouse gas emissions abatement and targets

In FY2011 and FY2012, our Customer Sector Groups identified

GHG emissions abatement projects and committed to implementing the most cost-effective options from FY2012 through to FY2017.

The suite of abatement projects successfully implemented in FY2012 will deliver an annual GHG emissions reduction of up to 260,000 tonnes. The combined effect of all abatement projects

to be undertaken through to FY2017 has enabled us to set a target to limit FY2017 GHG emissions equal to or below FY2006 levels.

Engaging in policy development

The issues associated with climate change continue to be a challenge for governments, communities and industries around the world and it seems a global solution to climate change is some time away. Until then, nations are likely to continue to accelerate

their domestic emissions reduction efforts and establish low-carbon economies, balancing their needs to ensure a reliable energy supply and sustain economic growth.


BHP BILLITON ANNUAL REPORT 2012 | 47

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2 Information on the Company continued



      1. Reducing our climate change impacts continued

        Engaging in policy development continued

        Governments globally are considering a variety of legislative and regulatory options to mitigate GHG emissions. In our view, assessing these options requires an understanding of their likely effectiveness, scale and cost, as well as their implications for economic growth and quality of life. We take an active role in climate change policy development in the key regions where we operate and market our products. We have developed six principles that outline what we believe climate change policies should deliver to best tackle carbon emission reduction: clear price signal; revenue neutral; trade friendly; broad-based, predictable and gradual; simple and effective. In all instances of climate change policy development, we analyse and compare the various policy options by evaluating the degree to which they meet these principles. Although we are committed to contributing to the public debate on climate change, including sharing our knowledge and experience, we recognise that it is for government and society as a whole to decide which direction to take.

        In recent years, we have actively engaged with the Australian Government on the development and implementation of its climate change policy response. During FY2012, we commented on the Australian Government’s draft Energy White Paper 2011, which

        will become the policy framework for government decision-making regarding energy sources in the years ahead. In terms of the carbon price introduced in July 2012, as part of the Australian Government’s Clean Energy Future Plan, we continue to hold the view that this

        is just one of the potential policy measures that government can adopt to address climate change and that any policy response should be broad-based and use a portfolio of complementary measures to deliver abatement. Independently, we maintain

        the Carbon Pricing Protocol, an internal mechanism for pricing carbon and determining carbon price impacts on our greenfield and brownfield developments and on mergers and acquisitions. The Carbon Pricing Protocol is updated annually to reflect internal and external carbon price modelling and the proposed treatment of carbon permits in countries where we operate.

      2. Managing water

        The sustainability of our operations relies on our ability to obtain the appropriate quality and quantity of water and to use this resource responsibly.

        Managing water is a complex issue

        Increased competition for water, due to population growth, urbanisation and industrialisation, is affecting the quantity and quality of available water resources and poses a potential operational risk for our business. The social, cultural, environmental, ecological and economic values of water have led to greater scrutiny of responsible water use and expectations from our stakeholders

        for improved resource stewardship. We are experiencing greater governance, regulation and performance requirements in response to these expectations. At the same time, climate change is likely

        to make the patterns and cycles of water flows less predictable, requiring flexible and adaptive responses. We also consider the cumulative effects on water resources when multiple operations are active within a region.

        Managing water risks across our operations

        Water risks and impacts experienced by our operations vary from region to region and from site to site, with some sites facing multiple and conflicting risks, including water scarcity, water excess and water quality issues.

        The range of potential water-related risks and their potential impacts on water resources, biodiversity and communities makes managing water a complex task for our businesses. To ensure these impacts are managed to an acceptable level, all operations are required to develop a Water Management Plan. This plan takes into consideration the baseline quantity and quality of water potentially affected and quantifies the acceptable level of impact to water resources, taking into account regulatory requirements and stakeholder expectations. It also details the preventive and mitigating controls necessary to achieve the acceptable level of


        impact, with each operation required to implement a monitoring and review program that verifies the effectiveness of these controls.

        In FY2012, we achieved our water target with a 29 per cent improvement in the ratio of water recycled/reused to high-quality water consumed when compared with the FY2007 base year.

        This was primarily due to the reduction in high-quality water use and increase in desalinated water use at our Base Metals Escondida Asset.

        Our new water target requires all operations with water-related material risks, including volume and quality considerations,

        to set targets and implement projects to reduce their impact

        on water resources. This target recognises the local and regional context of water by including all material risks, rather than adhering to a single metric based on water use reduction,

        and allows operations to define the necessary projects that will best address their material water risks.

        Onshore US and hydraulic fracturing

        In line with our strategy to have a suite of diversified commodities, we made a significant investment in natural gas and liquids by acquiring the US Fayetteville shale resource from Chesapeake Energy Corporation in March 2011 and subsequently acquiring Petrohawk Energy Corporation in August 2011, which now form our Petroleum Onshore US business. Extracting oil and gas from shale involves hydraulic fracturing. Hydraulic fracturing is an essential and common practice in the oil and gas industry to stimulate production of natural gas and oil from dense subsurface rock formations.

        Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation to allow flow of hydrocarbons into the wellbore.

        Public concerns have been raised about hydraulic fracturing, including potential environmental impacts of the hydraulic fracturing fluid, its potential effect on drinking water aquifers, the handling and disposal of waste water produced from the wells, and the visual, noise and traffic impacts on the use of the surface land.

        The oil and gas industry is well established and is subject to federal, state and local regulations requiring permits for well construction, drilling and waste water disposal. The waste water produced from the wells, including the hydraulic fracturing fluids, is disposed of safely in accordance with applicable oil and gas industry regulations and BHP Billiton’s operating standards. The composition of hydraulic fracturing fluids, including chemicals, is publicly disclosed

        in FracFocus, the hydraulic fracturing Chemical Disclosure Registry (www.fracfocus.org). Our priority is to safely develop these operations in a way that protects the health and safety of the environment and the communities in which we operate.

        Developing new water accounting standards

        Unlike the more developed accounting approach to GHG emissions, there is no internationally consistent approach to water accounting and reporting. During FY2012, we piloted the Minerals Council

        of Australia’s Water Accounting Framework at several of our sites. From FY2013, we will align our water reporting across all our operations with the framework, which aims to improve data integrity, allow more meaningful analysis to inform policy-making and deliver improved outcomes for industry and communities.

      3. Managing land and enhancing biodiversity

We seek to deliver lasting benefits to the environment and communities by improving natural resource management and enhancing biodiversity. Securing access to land and managing it effectively are essential components of our commitment to operate in a responsible and sustainable manner. We depend upon biodiversity and the related benefits derived from ecosystems, which include food, air and water.

Biodiversity and land is a complex issue

We appreciate the importance of preserving biodiversity and the challenge this presents to all land users. Host governments

and communities are seeking a greater demonstration of effective land stewardship as a critical component in their decision to grant land access. This is exacerbated by growing competition for land, whether it is for mining, agriculture, forestry, water supply or


48 | BHP BILLITON ANNUAL REPORT 2012

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      1. Managing land and enhancing biodiversity continued biodiversity conservation. Increasingly, operations are located within areas of greater environmental or social sensitivity. Consequently, this requires broader consideration of how we manage land use and biodiversity at our operations and how

        this is balanced with other societal needs. Obtaining community support is most challenging when there is strong competition

        for the use of the land, such as the competition between resource development and agriculture.

        Biodiversity, land and our business

        We assess and manage the potential land and biodiversity impacts of our operations throughout their life cycle. Our Environment GLD requires all operations to have Land and Biodiversity Management Plans that incorporate baseline and impact assessments, controls designed to mitigate impacts on biodiversity and the related benefits derived from ecosystems, and monitoring programs

        to verify the effectiveness of controls. Operations are required to adhere to a formal management hierarchy that begins with avoiding disturbance, followed by mitigating negative impacts, rehabilitating land (both during operation and at closure) and undertaking compensatory actions, such as biodiversity offsets, at our operations. We rehabilitate disturbed areas consistent with the pre disturbance land use or alternative land uses developed in consultation with stakeholders. We have explicit commitments relating to exploration and extraction of resources in areas of high environmental sensitivity and also in relation to threatened species.

        Managing land access

        Our approach to land access is undertaken on a case-by-case basis, and takes into account potential environmental, societal, economic or cultural impacts. We first consider what land we need. We then look at our possible short-term and long-term impacts on that land, including the effects that our use may have on biodiversity and the related benefits derived from ecosystems. We also

        seek to identify the present and past uses of the land and any landowners, occupiers and users who may be affected by our activities. Compensatory actions, such as biodiversity offsets, may be undertaken where residual impacts exceed the acceptable level of impact to biodiversity, land use water resources.

        Addressing land rehabilitation challenges

        The rehabilitation of land no longer required for our activities continues to be a central part of our approach to managing our effects on land. In 2007, we established a target of achieving a

        10 per cent improvement in the land rehabilitation index (the ratio of land rehabilitated to land disturbed). We did not achieve our land

        rehabilitation target due to the growth of some of our operations and the challenges associated with progressive rehabilitation while an operation is active. This delayed our ability to rehabilitate land for suitable uses that meet environmental and stakeholder requirements.

        Enhancing biodiversity and contributing to conservation Improving our management of land and enhancing biodiversity are essential to operating in a responsible and sustainable manner.

        In July 2012, we introduced new biodiversity and conservation targets. The first target focuses on a core business requirement to implement management plans that include controls to prevent, minimise, rehabilitate and offset impacts to biodiversity and the related benefits derived from ecosystems. In addition to this,

        we have introduced a conservation target, which will see the Group finance the conservation and ongoing management of areas of high biodiversity and ecosystem value that are of national or international conservation significance. As a result of this conservation target, we will broaden our environmental activities beyond what could

        be achieved by our operations alone. This conservation work will be largely supported by the five-year alliance established in FY2012 between Conservation International and BHP Billiton, which aims to deliver significant and lasting benefits to the environment by preserving areas of high conservation value.

        Managing waste

        Mining and mineral processing operations produce large quantities of mineral waste, including waste rock, tailings and slag, which need to be effectively managed. Our operations are required to have

        Waste Management Plans, which address waste minimisation, storage, transportation and disposal. These plans are maintained to control risk of adverse impacts on the environment and communities.


        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        Tailings dams are constructed and operated to engineering standards, and monitored and assessed to manage material risks, including

        the risk of failure. Mineral wastes are analysed for physical and geochemical characteristics to identify potential impacts arising from erosion, acid rock drainage, salinity, radioactivity and metal leaching. We do not dispose of tailings or waste rock into river or marine environments.

      2. Ensuring meaningful engagement with our stakeholders

We engage regularly, openly and honestly with people and organisations interested in and affected by our operations and take their views and concerns into account in our decision-making.

Effectively engaging with our stakeholders

We define stakeholders as those who are potentially affected by our operations or who have an interest in or an influence over what we do. Our key stakeholders include the investment community, shareholders, customers, media, business partners, employees and contractors, local and Indigenous communities, industry associations, suppliers, governments and regulators, non-government organisations (NGOs), community-based organisations and labour unions.

We seek to build trust with stakeholders at the earliest possible stage of a project’s life. Our Community GLD stipulates that

a Stakeholder Engagement Management Plan be in place from the development phase of a project and be reviewed annually.

The plans identify the interests and relationships of stakeholders and contain a range of culturally and socially inclusive engagement activities to encourage open communication. Our operations

are required to measure the effectiveness of their stakeholder engagement by conducting mandatory community perception surveys every three years.

Engaging with NGOs through the Forum on Corporate Responsibility

Established in 1999, the Forum on Corporate Responsibility currently includes six members from our Group Management Committee (GMC) and eight senior leaders from the NGO sector. The NGO members have extensive experience in regions where we have business interests, including South America, west Africa, Australia and the United Kingdom. Our Chief Executive Officer chairs the meetings, which were held twice during FY2012.

The Forum encourages open discussion and expression of views on environmental, socio-economic, geopolitical and ethical issues. Sustainability issues discussed in the past financial year included energy choices; biodiversity; Indigenous people and free prior

and informed consent; resource endowment and benefit sharing; and consideration of our new HSEC targets. While we are not bound by the advice of the Forum and the Forum does not necessarily endorse the Company’s decisions, the meeting provides insight into society’s current priorities and an opportunity to understand and debate issues from multiple viewpoints.

Acknowledging customary rights

At a very early stage in a project, before any substantive work is carried out on the ground, we seek to identify landowners, occupiers and users who may be affected by our activities.

Knowing who owns and uses the land is critical to establishing an effective community consultation and engagement program.

In instances where land may be used for customary purposes and no formal land title has been issued, information is sought from relevant organisations to determine those groups with connections

to the land. This includes government authorities with responsibilities for customary land uses and any Indigenous peoples’ representative organisations. Surveys are commissioned to identify the customary owners and how the land is being used to ensure these uses are taken into account in our development plans.


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      1. Ensuring meaningful engagement with our stakeholders continued

        Committed to broad-based community support

        We require greenfield or significant expansion projects to obtain support from stakeholders before proceeding with development. Such broad-based community support is distinct from achieving free, prior and informed consent, which we seek when it is mandated and defined by law.

        Addressing community concerns

        Our operations are required to have local processes to accept, assess and resolve community concerns, complaints and grievances about the performance or behaviour of BHP Billiton and our people. As part of the complaint resolution process, all complaints and grievances are required to be acknowledged, documented and investigated internally. As required, appropriate actions are implemented and complainants are advised of the outcome.

      2. Making a positive contribution to society

        We develop partnerships that promote social and economic development and benefit the broader community. We work with host governments and other organisations to create transparency of the broad economic benefits to communities generated from our operations.

        Our broad socio-economic contribution

        At a Group level, we are an active participant in industry and sustainable development forums, such as the International Council on Mining and Metals (ICMM), and we are a member of the World Business Council for Sustainable Development.

        We seek to understand our socio-economic impact on local communities and host regions through our participation in the ICMM’s multi-stakeholder Resource Endowment initiative (REi).

        The REi aims to enhance the mining industry’s socio-economic contribution to the countries and communities where organisations like BHP Billiton operate by better understanding the factors that either inhibit or promote social and economic development that are linked to large-scale mining projects.

        We engage with governments on a range of policy issues, and also play a role in advocating transparent and ethical governance through our own actions and in discussion with opinion leaders.

        Economic value for regional economies is generated through revenues, employee compensation and other operating costs, donations and other community investments, retained earnings and payments

        to capital providers and to governments. Nationally and regionally, we contribute taxes and royalties to governments that in turn provide infrastructure and services to their constituents. Additionally,

        we often develop infrastructure that provides local communities and businesses with benefits, such as airports, roads, community childcare centres and medical clinics.

        Training and employing local people is important to us. However, our ability to have a significant impact on unemployment is limited by the nature of our operations as typically we require highly skilled people with relevant industry and technical experience. We make a broader economic contribution through indirect employment, where we focus on building the capacity of local businesses to provide

        us with a diverse range of services and products. Our approach is to source locally if a product or service that meets our requirements is available. In FY2012, 45 per cent of our Group spend was with local and regional suppliers. Local and regional spend, in this context, refers to spend within communities in which we operate

        and the regions, such as states and provinces, where our operations are located.

        We also voluntarily invest one per cent of our pre-tax profit, calculated on the average of the previous three years’ pre-tax profit, in community programs that aim to have a long-lasting positive impact on people’s quality of life. This includes implementing new and supporting existing community projects.


        Community development programs

        Our community development programs are focused on improving the quality of life of people in our host communities.

        Each community development project is required to be linked to a Community Development Management Plan. In FY2012, as part of a GMC key performance indicator, all controlled

        operations developed and implemented Community Development Management Plans in compliance with our Community GLD.

        Community development projects are selected on the basis of their capacity to have a positive impact on the quality-of-life indicators for the relevant community and enhance the Group’s licence to operate. Projects must have documented objectives specifically linked to the achievement of long-term sustainable community development and improvements in indicators identified in a

        social baseline study. We monitor progress by tracking changes

        in these indicators every three years. Prior to approval, community projects are required to be assessed in relation to anti-corruption requirements and are implemented in accordance with the

        BHP Billiton Code of Business Conduct.

        During FY2012, our voluntary community investment totalled US$214 million (1), comprising cash, in-kind support and administrative costs and included a US$65 million contribution to our UK-based charitable company, BHP Billiton Sustainable Communities. The cash component of our FY2012 community investment of US$128.6 million comprises:

        • direct investment in community programs;

        • contributions to the Group’s charitable foundations, excluding BHP Billiton Sustainable Communities;

        • the Enterprise Development and socio-economic development components of our broad-based Black Economic Empowerment programs in South Africa.

          Excluding the contribution to BHP Billiton Sustainable Communities, 51 per cent of our expenditure was invested in local communities, 38 per cent was invested regionally and the remaining 11 per cent was invested in national or international programs in countries where we operate.

          Supporting employee contributions

          In addition to the social programs directly supported by the Group, many of our employees make a valuable contribution to their local communities by giving their personal time and expertise to a range of activities. One of the most significant ways we support the efforts of our employees engaged in community activities is through our global Matched Giving Program, whereby the Company matches employee volunteering hours, fundraising and donation efforts.

          The program aims to strengthen local communities by supporting and encouraging employees who volunteer, fundraise or donate to not-for-profit organisations. In FY2012, more than 6,000 employees participated in the Matched Giving Program, volunteering a total of approximately 60,000 hours of their own time to community activities important to them. Employee contributions benefited more than 1,400 not-for-profit organisations, which received US$7.7 million from the Group as part of the program.

      3. Understanding and managing our human rights impact

        We have a responsibility to understand our potential impacts on human rights and to mitigate or eliminate them. We operate

        in accordance with the United Nations (UN) Universal Declaration of Human Rights and the UN Global Compact Principles. Our Charter and Code of Business Conduct and the performance requirements detailed in our GLDs support this commitment.

        Our human rights due diligence process

        Our human rights due diligence process requires our operations to identify and document key potential human rights risks by completing a human rights impact assessment (HRIA). HRIAs must be verified through an engagement process with stakeholders, validated by a qualified specialist every three years and internally



        1. The expenditure represents BHP Billiton’s equity share for both operated and non-operated joint venture operations.


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      1. Understanding and managing our human rights impact continued

        reviewed on an annual basis. Where a HRIA identifies a material risk, a Human Rights Management Plan must be developed and implemented. Selected employees and contractors receive training on how to comply with BHP Billiton’s human rights commitments.

        Security and human rights

        Our Security and Emergency Management GLD requires all our operations to identify and manage security-related material risks to our people and property. The nature and global reach of our business can result in our people working in countries where there is potential exposure to personal and business risk. Each country

        is assessed for the degree of risk associated with visiting, exploring and operating within it, and appropriate controls are developed

        to mitigate identified risks. The Voluntary Principles on Security and Human Rights (VPs) assists organisations to maintain the safety and security of their operations through the provision

        of an operating framework that upholds respect for human rights and fundamental freedoms.

        We use both public and private security providers to protect

        our people and assets. Our Security and Emergency Management GLD requires private security providers engaged by BHP Billiton to be signatories to, or agree in writing to align with the International Code of Conduct for Private Security Providers.

        In addition to this, written advice is given to security providers outlining our commitment to the VPs and the expectation for private security providers, or request for public security providers, to operate consistently with these principles.

        Occasionally, it is necessary to provide armed security protection for the safety of our people. Firearms are only deployed under

        a set of approved rules of engagement and when it can be demonstrated that no other options exist to protect a human life, to carry out stewardship requirements (such as injured livestock management) or as a means of last resort when threatened

        by dangerous wildlife. Criteria for the use of firearms and rules of engagement must comply with the International Association of Oil and Gas Producers, ‘Firearms and the Use of Force’ (Report number 320, Revision 2).

      2. Reporting transparently and behaving ethically

        Wherever we operate in the world, we strive to work with integrity

        – doing what is right and doing what we say we will do. We care as much about how results are achieved as we do about the results

        themselves. At BHP Billiton, we believe that to maintain our position as one of the world’s leading companies, we must commit to the highest ethical business practices and governance standards in all our dealings. We strive to foster a culture that values and rewards exemplary ethical standards, personal and corporate integrity and respect for others.

        As our operations expand globally, we increasingly confront the challenges of doing business in political, legal and commercial environments where corruption is a real risk. However, regardless of the country or culture within which our people work, our

        Anti-corruption GLD and the Code of Business Conduct forbid bribery and corruption in all our business dealings.

        Particulars in relation to the Code of Business Conduct and anti-corruption are referred to in section 5.16 of this Report and in the Sustainability Report 2012 available online at www.bhpbilliton.com. Specific discussion on legal proceedings is available in section 8 of this Report.

        Transparently reporting taxes

        Through our membership of the ICMM, BHP Billiton supports the Extractive Industries Transparency Initiative (EITI), a global

        initiative to improve governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining. We are committed to supporting and cooperating in the implementation of country-level EITI Work Plans as our host countries progress the initiative.

        In line with our support for the EITI, we report in the Sustainability Report 2012 payment of taxes and royalties derived from resource development on a country-by-country basis. We presented the data as the taxes and royalty payments that we make as BHP Billiton, such as corporate income taxes and royalties, and those that we collect on behalf of employees.


        1

        Key information


        2

        Information on the Company


        3 Operating and financial review and prospects


        4 Board of Directors and

        Group Management Committee


        5

        Corporate Governance Statement


        6

        Remuneration Report

        Closure planning

        Closure planning is a key consideration in the planning and development of our projects and operations. Operations are required to produce Life of Asset Plans, which detail the activities to develop the resource, and Closure Plans, which describe the proposed methods to rehabilitate and remediate following those activities and address closure obligations. In addition to our projects and operating assets, we are also responsible for a number of legacy operations that are in various stages of decommissioning, rehabilitation or

        post-closure care and maintenance. Information on our closure and rehabilitation provisions can be found in note 18 ‘Provisions’ to the financial statements.

        Product stewardship

        As our primary activities are in the extraction (and, in some cases, processing) stages of a product’s life cycle, the majority of the life cycles of our products occur after the products have left our control. We recognise there is strong business merit in implementing product stewardship programs with other participants in the life cycles of our products. We seek to work with those involved in the product life cycles to enhance environmental and social performance along

        the supply chain and to promote responsible product use and management. This approach applies to all stages of the supply chain from product storage to transport, consumption, recycling and disposal of our products and by-products.

        In FY2012, we engaged in a number of product stewardship initiatives such as the Responsible Jewellery Council, Steel Stewardship Forum and Responsible Aluminium. For other commodities, including copper and nickel, we participate in the stewardship programs incorporated within industry associations.

        As a member of the ICMM, we have also committed to implementing the ICMM Sustainable Development Framework, which requires that we facilitate and encourage responsible design, use, re-use, recycling and disposal of our products.

        Many of our products are required to have a specific materials safety data sheet (MSDS). These MSDSs outline the relevant health, safety and environmental aspects of our products and are provided to customers and the transporters of our products.

        Managing our suppliers

        Our contractors and suppliers have requirements in their contracts consistent with Our Charter, Code of Business Conduct, and

        Anti-corruption GLD and Health, Safety, Environment and Community GLDs. In our Supply ‘Source to Contract’ GLD, we specify that our suppliers align with these requirements, as well as with our zero tolerance to a number of human rights issues, including child labour, inhumane treatment of employees and forced or compulsory labour. All contracted suppliers are categorised depending on their HSEC and business conduct risk, and our level of commercial dependency, and a procedure to engage with each supplier is developed appropriate to the level of risk.


    1. Employees

People are the foundation of our business and underpin our success. We value our people and encourage the development of talented and motivated individuals to support the continued performance and growth of our diverse operations. We strive to build a sense of purpose and achievement among all our people in the work we do.

By working to Our Charter, we align our people around our common purpose and values. We all use Our Charter as a vital reference point for how we do business, wherever we are in the world, and whatever work we do.


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2 Information on the Company continued



2.9 Employees continued

Our organisation is structured in four component parts: CSGs, Minerals Exploration, Marketing and Group Functions.

Each part of our organisation has a clear mandate that sets out the scope of responsibilities and accountabilities.

In FY2012, we had an average of 46,370 employees working in more than 100 locations worldwide. We had an average of 78,813

contractors globally (2011: 64,548; 2010: 58,563). Females comprise 17 per cent of our workforce. Approximately 10 per cent of our

406 senior leaders are female. For further information about our approach to diversity, please refer to section 5.17.

The table below provides a breakdown of the average number of employees, in accordance with our International Financial

Reporting Standards (IFRS) reporting requirements, which includes our proportionate share of jointly controlled entities’ employees, the Executive Director and 100 per cent of employees of subsidiary companies, by CSG for each of the past three financial years.

Part-time employees are included on a full-time equivalent basis. Employees of businesses acquired or disposed of during a particular year are included for the period of ownership. Contractors are not included in the figures below.

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CSG FY2012 FY2011 FY2010


2.10.2 DLC structure

The principles of the BHP Billiton DLC are reflected in the BHP Billiton Sharing Agreement and include the following:

No other matter or circumstance has arisen since the end of FY2012 that has significantly affected or is expected to significantly affect the operations, the results of operations or state of affairs of the Group in future years.



7

Directors’ Report


8

Legal proceedings


9

Financial Statements


10

Glossary


11

Shareholder information

    1. Share capital and buy-back programs

      At the Annual General Meetings held in 2011, shareholders authorised BHP Billiton Plc to make on-market purchases of up to 213,618,545 of its ordinary shares, representing approximately 10 per cent of BHP Billiton Plc’s issued share capital at that time. Shareholders will be asked at the 2012 Annual General Meetings to renew this authority. The Directors have no present intention to exercise this authority, if granted.

      During FY2012, we did not make any on-market or off-market purchases of BHP Billiton Limited shares or BHP Billiton Plc shares under any share buy-back program. The BHP Billiton share buy-back program was completed on 29 June 2011 through a combination

      of on-market and off-market buy-backs. As at 30 June 2011, there were 2,181,737 BHP Billiton Plc shares, with a nominal value of US$0.50 per share, purchased on-market under the FY2011 buy-back program, which were cancelled during FY2012.

      Some of our executives receive options over BHP Billiton shares as part of their remuneration arrangements. Entitlements may be satisfied by the transfer of existing shares, which are acquired on-market, or in respect of some entitlements, by the issue

      of new shares.

      The shares in column ‘A’ below were purchased to satisfy awards made under the various BHP Billiton Limited and BHP Billiton Plc employee share schemes during FY2012.


      image

      A B C D


      Period

      Total number of shares purchased

      Average price paid per share (a)

      US$

      publicly announced Maximum number of shares that may yet be plans or programs purchased under the plans or programs

      BHP Billiton Limited (b) BHP Billiton Plc (c)

      1 July 2011 to 31 July 2011

      132,012

      45.83

      – – 128,176,372 (d)

      1 Aug 2011 to 31 Aug 2011

      3,040,558

      39.83

      – – 128,176,372 (d)

      1 Sep 2011 to 30 Sep 2011

      3,417,023

      40.82

      – – 128,176,372 (d)

      1 Oct 2011 to 31 Oct 2011

      1,196,821

      31.67

      – – 128,176,372 (d)

      1 Nov 2011 to 30 Nov 2011

      171,133

      38.22

      – – 213,618,545 (e)

      1 Dec 2011 to 31 Dec 2011

      301,155

      36.33

      – – 213,618,545 (e)

      1 Jan 2012 to 31 Jan 2012

      95,819

      31.97

      – – 213,618,545 (e)

      1 Feb 2012 to 29 Feb 2012

      99,249

      39.38

      – – 213,618,545 (e)

      1 Mar 2012 to 31 Mar 2012

      270,706

      38.08

      – – 213,618,545 (e)

      1 Apr 2012 to 30 Apr 2012

      1,728,881

      35.68

      – – 213,618,545 (e)

      1 May 2012 to 31 May 2012

      393,053

      35.28

      – – 213,618,545 (e)

      1 June 2012 to 30 June 2012

      286,267

      31.63

      – – 213,618,545 (e)

      Total

      11,132,677

      38.08

      – – 213,618,545 (e)

      Total number of shares purchased as part of


      1. The shares were purchased in the currency of the stock exchange on which the purchase took place, and the sale price has been converted into US dollars at the exchange rate on the day of the purchase.

      2. BHP Billiton Limited is able to buy-back and cancel BHP Billiton Limited shares within the ‘10/12 limit’ without shareholder approval in accordance with section 257B of the Australian Corporations Act 2001. Any future on-market share buy-back program will be conducted in accordance with the Australian Corporations Act 2001 and with the ASX Listing Rules.

      3. The share buy-back program was completed on 29 June 2011.

      4. At the Annual General Meetings held during 2010, shareholders authorised BHP Billiton Plc to make on-market purchases of up to 223,112,120 of its ordinary shares, representing approximately 10 per cent of BHP Billiton Plc’s issued share capital at that time. During FY2011, 94,935,748 BHP Billiton Plc shares were purchased

        on-market pursuant to this authority, with capacity remaining under the authority to purchase up to 128,176,372 BHP Billiton Plc shares during FY2012 until the authority expired at the conclusion of the Annual General Meeting of BHP Billiton Limited in November 2011.

      5. At the Annual General Meetings held during 2011, shareholders authorised BHP Billiton Plc to make on-market purchases of up to 213,618,545 of its ordinary shares, representing approximately 10 per cent of BHP Billiton Plc’s issued capital at the time.


        BHP BILLITON ANNUAL REPORT 2012 | 161

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        7 Directors’ Report continued



    2. Results, financial instruments and going concern

      Information about our financial position and financial results is included in the financial statements in this Annual Report. The income statement shows profit attributable to BHP Billiton members of US$15.4 billion compared with US$23.6 billion

      in FY2011.

      The Group’s business activities, together with the factors

      likely to affect its future development, performance and position are discussed in section 3 of this Annual Report. In addition, sections 1.5 and 5.14, and note 28 ‘Financial risk management’

      to the financial statements detail the Group’s capital management objectives, its approach to financial risk management and exposure to financial risks, liquidity and borrowing facilities.

      Each of these sections is incorporated into, and forms part of, this Directors’ Report.

      The Directors, having made appropriate enquiries, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

      Therefore they continue to adopt the going-concern basis of accounting in preparing the annual financial statements.


    3. Directors

      The Directors who served at any time during or since the end of the financial year were Jac Nasser, Marius Kloppers, Malcolm Broomhead, John Buchanan, Carlos Cordeiro,

      David Crawford, Pat Davies, Carolyn Hewson, Lindsay Maxsted, Wayne Murdy, Keith Rumble, John Schubert and Shriti Vadera. Further details of the Directors of BHP Billiton Limited and

      BHP Billiton Plc are set out in section 4.1 of this Annual Report. These details include the period for which each Director held office up to the date of this Directors’ Report, their qualifications, experience and particular responsibilities, the directorships held in other listed companies since 1 July 2009, and the period for which each directorship has been held.

      Mr Davies was appointed as a Director of BHP Billiton Limited

      and BHP Billiton Plc with effect from 1 June 2012, and in accordance with the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc, Mr Davies will seek election at the 2012 Annual General Meetings.

      The number of meetings of the Board and its Committees held during the year and each Director’s attendance at those meetings are set out in section 5.11 of this Annual Report.


    4. Remuneration and share interests

      1. Remuneration

        The policy for determining the nature and amount of emoluments of members of the Group Management Committee (GMC) (including the Executive Director) and the Non-executive Directors and information about the relationship between that policy and

        our performance are set out in sections 6.4 to 6.8 and 6.10 of this Annual Report.

        The remuneration tables contained in sections 6.7 to 6.10 of this Annual Report set out the remuneration of members of the GMC (including the Executive Director) and the Non-executive Directors.

      2. Directors

        The table contained in section 7.20 of this Directors’ Report sets out the relevant interests in shares in BHP Billiton Limited and BHP Billiton Plc of the Directors who held office during FY2012,

        at the beginning and end of FY2012, and in relation to all Directors in office as at the date of this Directors’ Report, their relevant interests in shares in BHP Billiton Limited and BHP Billiton Plc

        as at the date of this Directors’ Report. No rights or options over shares in BHP Billiton Limited and BHP Billiton Plc are held by any of the Non-executive Directors. Interests held by the Executive Director under share and option plans as at 30 June 2012 are set out in the tables showing interests in incentive plans contained


        in section 6.8 and note 30 ‘Key Management Personnel’ to the financial statements of this Annual Report.

        We have not made available to any Director any interest in a registered scheme.

        The former Directors of BHP Limited participated in a retirement plan under which they were entitled to receive a payment on retirement calculated by reference to years of service. This plan was closed on 24 October 2003, and benefits accrued to that

        date are held by BHP Billiton Limited and will be paid on retirement.

        Further information about this plan and its closure are set out in section 6.10.3 of this Annual Report.

      3. GMC members

The table contained in section 7.21 of this Directors’ Report sets out the relevant interests held by members of the GMC (other than the Executive Director) in shares of BHP Billiton Limited and BHP Billiton Plc at the beginning and end of FY2012, and at the date of this Directors’ Report. Interests held by members of the GMC under share and option plans as at 30 June 2012 are set out in the tables showing interests in incentive plans contained in section 6.8 and note 30 ‘Key Management Personnel’

to the financial statements of this Annual Report.


    1. Secretaries

      Jane McAloon is the Group Company Secretary. Details of her qualifications and experience are set out in section 4.1 of this Annual Report. The following people also act as the Company Secretaries of either BHP Billiton Limited or BHP Billiton Plc: Nicola Evans, BBus, Deputy Company Secretary, BHP Billiton Limited, and

      Geof Stapledon, BEc, LLB (Hons), DPhil, FCIS, Deputy Company Secretary, BHP Billiton Plc and Elizabeth Hobley, BA (Hons), ACIS, Deputy Company Secretary, BHP Billiton Plc. Each such individual has experience in a company secretariat role or other relevant fields arising from time spent in such roles within BHP Billiton, large listed companies or other relevant entities.


    2. Indemnities and insurance

Rule 146 of the BHP Billiton Limited Constitution and Article 146

of the BHP Billiton Plc Articles of Association require each Company to indemnify to the extent permitted by law, each Director, Secretary or Executive Officer of BHP Billiton Limited and BHP Billiton Plc respectively against liability incurred in, or arising out of, the conduct of the business of the Company or the discharge of the duties of the Director, Secretary and Executive Officer. The Directors named in section 4.1 of this Annual Report, the Executive Officers and the Company Secretaries of BHP Billiton Limited and BHP Billiton Plc have the benefit of this requirement, as do individuals who formerly held one of those positions.

In accordance with this requirement, BHP Billiton Limited and BHP Billiton Plc have entered into Deeds of Indemnity, Access and

Insurance (Deeds of Indemnity) with each of their respective Directors. The Deeds of Indemnity are qualifying third party indemnity provisions for the purposes of the UK Companies Act 2006.

We have a policy that we will, as a general rule, support and hold harmless an employee, including an employee appointed as a Director of a subsidiary who, while acting in good faith, incurs personal liability to others as a result of working for us.

From time to time, we engage our External Auditor, KPMG, to conduct non-statutory audit work and provide other services in accordance with our policy on the provision of other services by the External Auditor. The terms of engagement typically include an indemnity

in favour of KPMG:

a permanent establishment.

An individual who ceases to be a resident in the UK for tax purposes while owning shares or ADSs and then disposes of those shares or ADSs while not a UK resident may become subject to UK tax on capital gains if he/she subsequently becomes treated as a UK resident again before five complete UK tax years of non-UK residence have elapsed from the date he/she left the UK. In this situation US holders will generally be entitled to claim US tax paid on such a disposition

as a credit against any corresponding UK tax payable.

UK inheritance tax

Under the current UK–US Inheritance and Gift Tax Treaty, ordinary shares or ADSs held by a US holder who is domiciled for the purposes of the UK–US Inheritance and Gift Tax Treaty in the US, and is not for the purposes of the UK–US Inheritance and Gift Tax Treaty a national of the UK, will generally not be subject to UK inheritance tax on

the individual’s death or on a chargeable gift of the ordinary shares or ADSs during the individual’s lifetime, provided that any applicable US federal gift or estate tax liability is paid, unless the ordinary shares or ADSs are part of the business property of a permanent establishment of the individual in the UK or, in the case of

a shareholder who performs independent personal services, pertain to a fixed base situated in the UK. Where the ordinary shares or ADSs have been placed in trust by a settlor who, at the time of settlement, was a US resident shareholder, the ordinary shares or ADSs will generally not be subject to UK inheritance tax unless the settlor,

at the time of settlement, was not domiciled in the US and was a UK national. In the exceptional case where the ordinary shares or ADSs are subject to both UK inheritance tax and US federal gift or estate tax, the UK–US Inheritance and Gift Tax Treaty generally provides for double taxation to be relieved by means of credit relief.

UK stamp duty and stamp duty reserve tax

Under applicable legislation, UK stamp duty or stamp duty reserve tax (SDRT) is, subject to certain exemptions, payable on any issue or transfer of shares to the Depositary or their

nominee where those shares are for inclusion in the ADR program at a rate of 1.5 per cent of their price (if issued), the amount

of any consideration provided (if transferred on sale) or their

value (if transferred for no consideration). However, from 1 October 2009, this 1.5 per cent charge has generally ceased to apply to issues of shares into EU depositary receipt systems and into EU clearance systems. Further, the First-tier Tribunal has recently held that the 1.5 per cent SDRT charge on a transfer of shares to an issuer of American Depositary Receipts (ADRs) (as an integral part of a fresh capital raising) was incompatible with European Union law. Her Majesty’s Revenue and Customs has confirmed that it will no longer seek to impose the 1.5 per cent SDRT charge on the issue of shares to a depositary receipt issuer or a clearance service outside the European Union. The law in this area may still be susceptible

to change. We recommend advice should be sought in relation to paying the 1.5 per cent SDRT or stamp duty charge in

any circumstances.



274 | BHP BILLITON ANNUAL REPORT 2012

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11.6 Taxation continued

No SDRT would be payable on the transfer of an ADS. No UK stamp duty should be payable on the transfer of an ADS provided that the instrument of transfer is executed and remains at all times outside the UK. Transfers of ordinary shares to persons other than the Depositary or their nominee will give rise to stamp duty or SDRT

at the time of transfer. The relevant rate is currently 0.5 per cent

of the amount payable for the shares. The purchaser normally pays the stamp duty or SDRT.

Special rules apply to transactions involving intermediates and stock lending.

  1. US taxation

    This section describes the material US federal income tax consequences to a US holder of owning ordinary shares or ADSs. It applies only to ordinary shares or ADSs that are held as capital assets for tax purposes. This section does not apply to a holder of ordinary shares or ADSs that is a member of a special class

    of holders subject to special rules, including a dealer in securities, a trader in securities who elects to use a mark-to-market method

    of accounting for its securities holdings, a tax-exempt organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more

    of the voting stock of BHP Billiton Plc, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the US dollar.

    If a partnership holds the ordinary shares or ADSs, the US federal income tax treatment of a partner generally will depend on the status of the partner and the tax treatment of the partnership.

    A partner in a partnership holding the ordinary shares or ADSs should consult its tax adviser with regard to the US federal income tax treatment of an investment in the ordinary shares or ADSs.

    This section is in part based on the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with

    its terms.

    In general, for US federal income tax purposes, a holder of ADSs will be treated as the owner of the ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs, and ADSs for ordinary shares generally will not be subject to US federal income tax.

    Dividends

    Under US federal income tax laws and subject to the PFIC rules discussed below, a US holder must include in its gross income the gross amount of any dividend paid by BHP Billiton Plc out of its current or accumulated earnings and profits (as determined for

    US federal income tax purposes).The dividend is taxable to the holder when the holder, in the case of ordinary shares, or the Depositary,

    in the case of ADSs, actually or constructively receives the dividend.

    Dividends paid to a non-corporate US holder on shares or ADSs in taxable years beginning before 1 January 2013 will be taxable

    at the rate applicable to long-term capital gains (generally at a rate of 15 per cent) provided that the US holder holds the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date, and does not enter into certain risk reduction transactions with respect to the shares or ADSs during the abovementioned holding period. In addition, a non-corporate US holder that elects to treat the dividend income as ‘investment income’ pursuant to Section 163(d)(4) of the Internal Revenue Code will not be eligible for the reduced rate of taxation. In the case

    of a corporate US holder, dividends on shares and ADSs are taxed

    as ordinary income and will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.

    Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the holder’s tax basis, determined in US dollars, in the ordinary shares or ADSs and thereafter as a capital gain.


    7

    Directors’ Report


    8

    Legal proceedings


    9

    Financial Statements


    10

    Glossary


    11

    Shareholder information

    The amount of any cash distribution paid in any foreign currency will be equal to the US dollar value of such currency, calculated

    by reference to the spot rate in effect on the date such distribution

    is received by the US holder or, in the case of ADSs, by the Depositary, regardless of whether and when the foreign currency is in fact converted into US dollars. If the foreign currency is converted into US dollars on the date received, the US holder generally should not recognise foreign currency gain or loss on such conversion. If the foreign currency is not converted into US dollars on the date received, the US holder will have a basis in the foreign currency equal to its

    US dollar value on the date received, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of such currency. Such foreign currency gain or loss generally will be treated as US source ordinary income or loss.

    Dividends will be income from sources outside the US, and generally will be ‘passive category’ income or, for certain taxpayers, ‘general category’ income, which are treated separately from each other

    for the purpose of computing the foreign tax credit allowable to

    a US holder. In general, a taxpayer’s ability to use foreign tax credits may be limited and is dependent on the particular circumstances.

    US holders should consult their own tax advisers with respect to these matters.

    Sale of ordinary shares and ADSs

    Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realised and the holder’s tax basis, determined in US dollars,

    in those ordinary shares or ADSs. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The capital gain of a non-corporate US holder is generally taxed at preferential rates where the holder has

    a holding period greater than 12 months in the shares or ADSs sold. There are limitations on the deductibility of capital losses.

    The US dollar value of any foreign currency received upon a sale or other disposition of ordinary shares or ADSs will be calculated by reference to the spot rate in effect on the date of sale or other disposal (or, in the case of a cash basis or electing accrual basis

    taxpayer, on the settlement date). A US holder will have a tax basis in the foreign currency received equal to that US dollar amount, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as US source ordinary income or loss.

    Passive Foreign Investment Company Rules

    We do not believe that the BHP Billiton Plc ordinary shares

    or ADSs will be treated as stock of a PFIC for US federal income tax purposes, but this conclusion is a factual determination that is made annually at the end of the year and thus may be subject to change. If BHP Billiton Plc were treated as a PFIC, any gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as a capital gain. Instead, a US holder would be treated as if it had realised such gain and certain ‘excess distributions’ ratably over its holding period for

    the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, dividends received with respect to ordinary shares or ADSs would not be eligible for the special tax rates applicable to qualified dividend income if BHP Billiton Plc were a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead would be taxable at rates applicable to ordinary income. Assuming the shares or ADSs are ‘marketable stock’, a US holder may mitigate the adverse tax consequences described above by electing to be taxed annually on a mark-to-market basis with respect to such shares or ADSs.


    BHP BILLITON ANNUAL REPORT 2012 | 275

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    11 Shareholder information continued



      1. Taxation continued

  2. South African Taxation

Dividends

As from 1 April 2012, it is possible that US holders of

BHP Billiton Plc shares or ADS that remain South African residents may be subject to South African withholding tax on any dividends received from shares listed on the JSE.

No South African Dividends Tax is required to be withheld from dividends provided the dividends are paid to non-South African tax resident shareholders or South African tax resident corporate shareholders (including South African pension funds). These types of shareholders will generally be required to provide declarations to the regulated intermediaries making dividend payments to them to ensure no Dividend Tax is withheld.

However, Dividend Tax is required to be withheld on dividends paid on ordinary shares and ADSs of BHP Billiton Plc listed

on the JSE, where such dividends are paid to South African tax resident shareholders who are natural persons (individuals) or trusts, other than closure rehabilitation trusts. Except for certain exclusions, generally speaking such dividends paid to South African tax resident natural persons or trusts are not taxable under the South African law as the withholding tax is considered a final

and non-creditable levy.

Sale of ordinary shares and ADSs

US holders will not be liable for South African tax on capital gains realised on the disposal of ordinary shares or ADSs unless:

is attributable to a permanent establishment which the US holder has in South Africa.

A US holder who holds ordinary shares or ADSs connected to

a permanent establishment in South Africa will recognise a capital gain or loss for South African income tax purposes equal to the difference between the Rand value of the amount realised and

the holder’s tax basis, determined in Rand, in those ordinary shares or ADSs. The holder’s tax basis will generally be equal to the cost that was incurred to acquire the shares, if such shares were acquired after 1 October 2001. The capital gain of a non-resident’s permanent establishment in South Africa will be taxed at an effective rate

of 18.6 per cent.

Securities Transfer Tax

South African Securities Transfer Tax is levied at 0.25 per cent in respect of the transfer of ordinary shares or ADSs. The tax is levied on the amount of consideration at which the ordinary share or ADS is transferred or, where no value is declared, the closing price of the ordinary shares or ADSs. The tax is borne by the person to whom that ordinary share or ADS is transferred.


    1. Ancillary information for our shareholders

Information for BHP Billiton Limited and BHP Billiton Plc shareholders is provided in the BHP Billiton Group Annual Report 2012 and the Summary Review 2012.

The Annual Report provides the detailed financial data and information on the BHP Billiton Group’s performance required to comply with the reporting regimes in Australia, the United Kingdom and the United States. There are no specific disclosure requirements for the Summary Review, which is published

as a communication for shareholders.


276 | BHP BILLITON ANNUAL REPORT 2012


Shareholders of BHP Billiton Limited will receive a copy of the Annual Report or the Summary Review if they have requested a copy. Shareholders of BHP Billiton Plc will receive the Annual Report if they have requested a copy. ADR holders may view all documents online at www.bhpbilliton.com or opt to receive a hard copy by application to Citibank Shareholder Services, details as listed on the inside back cover of the Annual Report.

Change of shareholder details and enquiries

Shareholders wishing to contact BHP Billiton on any matter relating to their shares or ADR holdings are invited to telephone the appropriate office of the BHP Billiton Share Registrar or Transfer Office listed on the inside back cover of the Annual Report.

Any change in shareholding details should be notified by the shareholder to the relevant Registrar in a timely manner.

Shareholders can also access their current shareholding details and change many of those details online at www.bhpbilliton.com. The website requires shareholders to quote their Shareholder Reference Number (SRN) or Holder Identification Number (HIN)

in order to access this information.

Alternative access to the Annual Report and Summary Review

We offer an alternative for all shareholders who wish to

be advised of the availability of the Annual Report and Summary Review through our website via an email notification. By providing an email address through our website, shareholders will be notified by email when the Annual Report and Summary Review have been released. Shareholders will also receive notification of other major BHP Billiton announcements by email. Shareholders requiring further information or to make use of this service, should visit our website www.bhpbilliton.com.

ADR holders wishing to receive a hard copy of the Annual Report 2012 can do so by accessing citibank.ar.wilink.com or by calling Citibank Shareholder Services during business hours. ADR holders may also contact the adviser that administers their investments. Holders of BHP Billiton Plc shares dematerialised into STRATE should liaise directly with their Central Securities Depository Participant (CSDP) or broker.

Key dates for shareholders

The following table sets out future dates in the next financial and calendar year of interest to our shareholders. If there are any changes to these dates, all relevant stock exchanges (see section 11.1) will be notified.

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Date Event

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28 September 2012 Final Dividend Payment Date

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25 October 2012 BHP Billiton Plc Annual General Meeting in London

Venue:

The Queen Elizabeth II Conference Centre Broad Sanctuary

Westminster London SW1P 3EE UK

Time: 11.00am (local time)

Details of the business of the meeting are contained in the separate Notice of Meeting

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29 November 2012 BHP Billiton Limited Annual General Meeting in Sydney

Venue:

Sydney Convention Centre Darling Harbour

Sydney Australia

Time: 10.30am (local time)

Details of the business of the meeting are contained in the separate Notice of Meeting

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20 February 2013 Interim Results Announced

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8 March 2013 Interim Dividend Record Date 28 March 2013 Interim Dividend Payment Date 21 August 2013 Annual Results Announced

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Corporate Directory


BHP Billiton Group Registered Offices

BHP Billiton Limited Australia

BHP Billiton Centre 180 Lonsdale Street

Melbourne VIC 3000

Telephone 1300 554 757 (within Australia)

+61 3 9609 3333 (outside Australia)

Facsimile +61 3 9609 3015

BHP Billiton Plc United Kingdom Neathouse Place London SW1V 1BH

Telephone +44 20 7802 4000

Facsimile +44 20 7802 4111

Group Company Secretary

Jane McAloon

BHP Billiton Corporate Centres

South Africa

6 Hollard Street Marshalltown Johannesburg 2107

Telephone +27 11 376 9111

Facsimile +27 11 838 4716

Chile

Avenida Americo Vespucio Sur # 100 Piso 7

Las Condes 756999 Santiago

Telephone +56 2 330 5000

Facsimile +56 2 207 6509

United States

1360 Post Oak Boulevard, Suite 150

Houston, TX 77056-3020

Telephone +1 713 961 8500

Facsimile +1 713 961 8400

Marketing Offices

Singapore

10 Marina Boulevard, #50-01

Marina Bay Financial Centre, Tower 2 Singapore 018983

Telephone +65 6421 6000

Facsimile +65 6421 7000

Belgium

BHP Billiton Diamonds (Belgium) N.V. Hoveniersstraat 30

2018 Antwerp

Telephone +32 3 201 1090

Facsimile +32 3 213 0846


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Share Registrars and Transfer Offices

Australia

BHP Billiton Limited Registrar Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street

Abbotsford VIC 3067

Postal Address – GPO Box 2975 Melbourne VIC 3001

Telephone 1300 656 780 (within Australia)

+61 3 9415 4020 (outside Australia)

Facsimile +61 3 9473 2460 Email enquiries: www.investorcentre.com/bhp

United Kingdom

BHP Billiton Plc Registrar Computershare Investor Services PLC The Pavilions, Bridgwater Road Bristol BS99 6ZZ

Telephone +44 844 472 7001

Facsimile +44 870 703 6101 Email enquiries:

www.investorcentre.co.uk/contactus

South Africa

BHP Billiton Plc Branch Register and Transfer Secretary Computershare Investor Services (Pty) Limited

70 Marshall Street

Johannesburg 2001

Postal Address – PO Box 61051 Marshalltown 2107

Telephone +27 11 373 0033

Facsimile +27 11 688 5218 Email enquiries:

web.queries@computershare.co.za

Holders of shares dematerialised into STRATE should contact their CSDP or stockbroker.

New Zealand

Computershare Investor Services Limited Level 2/159 Hurstmere Road

Takapuna North Shore City

Postal Address – Private Bag 92119 Auckland 1142

Telephone +64 9 488 8777

Facsimile +64 9 488 8787

United States

Computershare Trust Company, N.A. 250 Royall Street

Canton, MA 02021

Postal Address – PO Box 43078 Providence, RI 02940-3078

Telephone +1 888 404 6340 (toll-free within US) Facsimile +1 312 601 4331

ADR Depositary, Transfer Agent and Registrar Citibank Shareholder Services

PO Box 43077

Providence, RI 02940-3077

Telephone +1 781 575 4555 (outside of US)

+1 877 248 4237 (+1-877-CITIADR)

(toll-free within US) Facsimile +1 201 324 3284 Email enquiries:

citibank@shareholders-online.com Website: www.citi.com/dr


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All up-to-date shareholder information is available online at image

www.bhpbilliton.com

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View this Report as well as our Summary Review and Sustainability Report.

Online shareholder services

Latest news

Reports and presentations

Company overview (including Our Charter, Structure and Governance)

Subscribe to receive news alerts sent directly to your email address

BHP Billiton produces a range of publications which are available in formats that allow shareholders to receive information in their preferred manner. View online, download or receive a paper copy by calling the relevant Share Registrar.

BHP Billiton Limited

1300 656 780 (from within Australia)

+61 3 9415 4020 (from elsewhere)

BHP Billiton Plc

+44 844 472 7001 (United Kingdom)

+27 11 373 0033 (South Africa)


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Cover story

BHP Billiton’s Base Metals CSG provides base metals concentrates to custom smelters and copper cathodes

to rod and brass mills and casting plants. Our cover picture was taken at Spence, an open-cut copper mine, located

in the Atacama Desert in northern Chile.

BHP Billiton is a Dual Listed Company comprising BHP Billiton Limited and BHP Billiton Plc. The two entities continue to exist as separate companies but operate as a combined Group known as BHP Billiton.

The headquarters of BHP Billiton Limited and the global headquarters of the combined BHP Billiton Group are located in Melbourne, Australia. BHP Billiton Plc is located in London, UK. Both companies have identical Boards of Directors and are run by a unified management team. Throughout this publication, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole.

Throughout this Annual Report, the terms BHP Billiton, the Company and the Group refer to the combined group, including both BHP Billiton Limited and subsidiary companies and BHP Billiton Plc and subsidiary companies.

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